The relationship between the quantity of money balances demanded and the interest rate is
A. determined by open market operations.
B. contractionary monetary policy.
C. negative.
D. the reserve requirements.
Answer: C
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To complete the theory of exchange rates, a model should be created that:
a. accommodates short-run changes in variables. b. accommodates long-run changes in variables. c. accommodates changes in expectations. d. accommodates short-run and long-run changes in variables and changes in expectations
In long-run macroeconomic equilibrium, the
A) real wage rate has adjusted so that the economy is on the short-run aggregate supply curve but not on the long-run aggregate supply curve. B) long-run aggregate supply curve has shifted in response to a money wage rate increase so that potential GDP equals real GDP. C) aggregate demand curve adjusts to the point where the long-run aggregate supply curve and the short-run aggregate supply curve intersect. D) None of the above answers is correct.