Over time, the wealth of society increases and payments technologies get more efficient. What is the effect on money demand of these two changes?
A) Money demand rises proportionately to the rise in wealth.
B) Money demand rises, but less than proportionately to the rise in wealth.
C) The overall effect is ambiguous.
D) Money demand declines.
C
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A major difference between stocks and bonds is that
A) bonds pay their owners dividends while stocks pay interest. B) bonds pay their owners interest while stocks pay dividends. C) the interest on a bond depends on the earnings of the corporation and is not guaranteed while dividends on stock are legally required. D) bonds represent ownership while stock represent debt.
A Phillips curve shows the short-run relationship between
A) potential GDP and real GDP. B) the nominal interest rate and the real interest rate. C) tax rates and tax revenues. D) the unemployment rate and the inflation rate.