In the analysis of the interest rate effect, when the price level changes, the quantity of money households and firms' want to hold and interest rates move in the ____ direction as the change in the price level, while investment and the quantity RGDP demanded move in the ____ direction as the change in the price level

The theory that firms will be slow to change their products' prices in response to changes in demand because there are costs to changing prices is called

A) transactions cost theory. B) cost—benefit theory. C) menu cost theory. D) gift exchange theory.

Government borrowing may crowd out borrowing by private interests because

A) funds are not available at any interest rate. B) the equilibrium interest rate increases. C) the supply curve shifts to the left. D) None of the above.