The Fed directly controls long-term interest rates

Based on the model of the money market, when real GDP increases, the equilibrium interest rate should

A) stay the same. B) increase. C) decrease. D) increase to the same extent that the supply of money increases.

The costs of inflation to households and firms due to holding less money and making more frequent trips to the bank are known as

A) seigniorage. B) menu costs. C) velocity costs. D) shoe-leather costs.