Suppose the current level of output and the interest rate are such that the economy is operating on neither the IS nor LM curve. Which of the following is true for this economy?
A) Production does not equal demand.
B) The money supply does not equal money demand.
C) The quantity supplied of bonds does not equal the quantity demanded of bonds.
D) Financial markets are not in equilibrium.
E) all of the above
E
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Measuring "y" on the vertical axis and "x" on the horizontal axis, convexity of indifference curves imply that the magnitude of MRS of "y" for "x"
A) is decreasing as "x" increases. B) is increasing as "x" increases. C) is constant as "x" increases. D) cannot be calculated for large levels of "x".
Developments in the computer software industry have made it extremely easy for firms to keep their books, conduct their own audits, and fill out the various tax forms. If accountants are an input in the accounting services industry, what will likely happen in the market for accountants? Is there a difference between the short run and the long run?