What does the demand curve for money look like? Why?
What will be an ideal response?
If the quantity of money is on the horizontal axis and the interest rate on the vertical axis, the demand curve for money is a downward sloping curve or line. People hold money because of money's role as a medium of exchange and a store of value. The lower the interest rate the lower the cost to hold money balances since the forgone interest is lower. People will hold more balances when the price of doing so is less, so the demand curve for money slopes down.
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Using economic efficiency as the standard, most economic models imply that ________ when trying to reduce the debt
A) increasing taxes is preferable to reducing government expenditure B) reducing government expenditure is preferable to increasing taxes C) increasing taxes is equally efficient as reducing government expenditure D) reducing government expenditure is no more effective than increasing taxes
When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses
a. True b. False Indicate whether the statement is true or false