What happens in the money market when there is a decrease in the supply of money?
A) The equilibrium quantity of money increases and the equilibrium interest rate increases.
B) The equilibrium quantity of money increases and the equilibrium interest rate decreases.
C) The equilibrium quantity of money decreases and the equilibrium interest rate increases.
D) The equilibrium quantity of money decreases and the equilibrium interest rate decreases.
Ans: C) The equilibrium quantity of money decreases and the equilibrium interest rate increases.
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An incentive is
A) a reward or a penalty that encourages or discourages an action. B) when people make rational choices by comparing costs and benefits. C) what you must give up to get something. D) a choice is made on the margin. E) a good or service that satisfies wants.
Which of the following statements regarding futures is true?
A) trading futures contracts on agricultural and mineral commodities makes up a majority of all trading. B) trading in financial futures involves more transactions than trading in commodity futures. C) futures trading is allowed only for financial assets. D) futures trading is allowed only for commodities.