If the demand curve for money were horizontal at some interest rate, an increase in the money supply
A) would lower the interest rate.
B) would increase the rate of inflation.
C) would be highly effective in reducing inflation.
D) would not change the interest rate
Ans: D) would not change the interest rate
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The demand curve for Widgets is given by
QD = 5800 - 200p + 30pG where QD is the quantity of widgets demanded, y is the per capita income and pG is the price of Gizmos. The supply of Widgets is given by: QS = 250p - 1250 a. Solve for the equilibrium price and quantity of widgets in terms of the price of Gizmos. b. Compute the comparative static derivatives for the changes in the equilibrium price and quantity of Widgets with respect to a change in the price of Gizmos.
The Social Security tax is
A. A regressive tax. B. A progressive tax. C. A proportional tax. D. A proportional tax at low income levels and a progressive tax at higher income levels.