Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to remain the same and monetary base to fall.
b. Demand for real goods and services to remain the same and M2 money supply to rise.
c. Demand for real goods and services to rise and M2 money multiplier to remain the same.
d. Demand for real goods and services to remain the same and M2 money supply to fall.
.C
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Other things remaining the same, the ________ the real interest rate, the ________
A) higher; greater the demand for loanable funds B) higher; greater the quantity of loanable funds demanded C) lower; greater the quantity of loanable funds demanded D) lower; greater the demand for loanable funds E) lower; greater the quantity of loanable funds supplied
Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists, the expected inflation rate for the following year would be:
a. 3.4 percent. b. less than 3.4 percent. c. 2.4 percent, because people form their expectations adaptively. d. around 6.8 percent. e. greater than 3.4 percent.