How does an increase in the short-term interest rate affect peoples' desire to hold real money balances?
A) People will hold more money to compensate for the higher interest rate.
B) People will hold more money in anticipation of higher inflation.
C) People will hold less money since they would be sacrificing more interest by holding money.
D) People will hold less money since it is not worth as much.
C
Economics
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Which of the following is FALSE for a profit-maximizing single-price monopolist?
A) P = MC B) MC = MR C) P > MR D) None of the above because they are all true.
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In a country with floating exchange rates and low capital mobility, an increase in government spending will be
A) highly effective. B) less effective than with high capital mobility. C) not effective at all. D) harmful to the growth of real incomes.
Economics