When the money supply decreases
a. interest rates fall and so aggregate demand shifts right.
b. interest rates fall and so aggregate demand shifts left.
c. interest rates rise and so aggregate demand shifts right.
d. interest rates rise and so aggregate demand shifts left.
d
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Which of the following is false? Critics of the ISLM framework have stated that
A) there is no linkage between flow and stock concepts. B) the interest rate is the only mechanism through which monetary policy operates. C) money is not a substitute for physical assets. D) velocity is assumed to be constant.
If a firm buys its labor in a competitive market, then a short-run increase in the price of the firm's output will cause the firm to
A) offer a higher wage. B) hire fewer workers. C) hire more workers. D) offer a lower wage.