The demand for money varies:
A. inversely with wealth.
B. inversely with the liquidity of other financial assets.
C. directly with the liquidity of other financial assets.
D. not all with the liquidity of other assets since money is liquid.
Answer: B
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Economics is the study of how people:
a. vote for political leaders who decide what is to be produced. b. make choices to produce and consume goods and services. c. establish social institutions that maximize well-being. d. develop value systems that affect their consumption choices.
The stability of consumption over the business cycle and the ability of changes in the real interest rate to redirect aggregate demand indicate that
a. government policy can improve the performance of the economy. b. market economies are inherently unstable. c. a market economy has a self-correcting mechanism that will help guide it toward full employment. d. recessions will be lengthy, and high rates of unemployment will persist for a period of time even after the economy recovers.