According to the interest rate effect, an increase in the price level causes people to:
a) increase their money holdings, which increases interest rates and decreases investment spending.
b) decrease their money holdings, which increases interest rates and decreases investment spending.
c) to increases their money holdings, which decreases interest rates and decreases investment spending.
d) to decrease their money holdings, which decreases interest rates and increases investment spending.
Ans: a) increase their money holdings, which increases interest rates and decreases investment spending.
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If a coupon bond has a "face value" of $1000, it means that
A) the original purchaser paid $1000 for it. B) each purchaser must pay $1000 for it. C) it was purchased for at least $1000 and perhaps more. D) the holder will be paid $1000 when the bond matures. E) the holder will be paid $1000 plus accumulated interest when the bond matures.
An increase in net exports would lead to an increase aggregate demand but would not lead to an increase in aggregate supply
a. True b. False Indicate whether the statement is true or false