The Keynesian theory of money demand predicts that people will increase their money holdings if they believe that
A) interest rates are about to fall.
B) bond prices are about to rise.
C) expected inflation is about to fall.
D) bond prices are about to fall.
D
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Assume all of the information from Question #11 above: If Willy actually does install the extra safety equipment, it will cost him $20,000 to do so. Based on this new information about its cost, will Willy be willing to install the new equipment?
A. Yes, because it costs him less than it is worth. B. Yes, because it costs him more than it is worth. C. No, because it costs him more than it is worth. D. No, because it costs him less than it is worth.
Which of the following would be most appropriate if the Federal Reserve wanted to increase the money supply in order to stimulate the economy?
a. Buy U.S. government securities. b. Force the Treasury to reduce the national debt. c. Raise the discount rate. d. Increase the reserve requirements.