If there is initially an
A) excess demand for money, the interest rate will fall, and the supply of money it will rise.
B) excess supply of money, the interest rate will fall, and if there is initially an excess demand, it will rise.
C) excess supply of money, the interest rate will rise, and if there is initially an excess demand, it will fall.
D) excess supply of money, the interest rate will fall, and if there is also an excess demand, it will fall rapidly.
E) excess supply of money, the interest rate will rise, and if there is also an excess demand, it will rise rapidly.
B
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Under the liquidity premium theory, the expectation that future short-term rates will be constant results in a yield curve that
A) is flat. B) slopes upward. C) slopes downward. D) is flat, slopes upward, or slopes downward, depending on the size of the term premium at each maturity.
The promise that was to hold the Bretton Woods system together was the agreement that
A) no industrial country would allow high rates of inflation. B) foreign central banks would be able to convert U.S. dollars into gold at a fixed price. C) no country would raise tariffs on the products of other countries. D) all countries would be willing to redeem their paper currencies for gold.