The transactions demand for holding money is when people hold money:
a. instead of near money.
b. to transact purchases they expect to make.
c. as insurance against unexpected expenses.
d. to speculate in the stock market.
e. to take advantage of changes in interest rates.
b
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Using aggregate demand and aggregate supply, explain what happens in the short run if the Federal Reserve raises interest rates in the economy. Be sure to detail what happens to aggregate demand, the price level, the level of GDP, and unemployment
Assume that the economy is at full employment before the interest rate increase.
Which of the following explains the effect of prices on profits in the short-run?
a. The direct relationship between aggregate quantity demanded and national output. b. The direct relationship between aggregate quantity supplied and the price level. c. The inverse relationship between aggregate quantity demanded and national output. d. The inverse relationship between aggregate quantity supplied and profits. e. The inverse relationship between aggregate quantity supplied and national output.