If the price level rises, what will happen to the demand for reserves?
A. It will shift outward.
B. It will shift inward.
C. It will remain unchanged.
D. It depends on what happens to interest rates.
Answer: A
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The neoclassical theory of investment
A) links investment spending to stock prices. B) emphasizes that current investment spending depends positively on the expected future growth of GDP. C) emphasizes the role of real interest rates and taxes as determinants of investment. D) suggests that a downturn in real GDP will lead to a sharp fall in investment, which leads to further reductions in GDP through the multiplier.
Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________
A) decreases; they both benefit B) increases; they both benefit C) decreases; neither benefit D) increases; only one party benefits