If the demand for money decreases, but the Fed keeps the money supply the same:

a. nominal interest rates will rise and aggregate demand will fall.
b. nominal interest rates will rise and aggregate demand will rise.
c. nominal interest rates will fall and aggregate demand will fall.
d. nominal interest rates will fall and aggregate demand will rise.

d

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If the consumption function can be described as C = 200 + .80Y, the marginal propensity to save is equal to

A) -0.80. B) 0.80. C) 0.20. D) 200.

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What is convergence hypothesis? Why should we expect convergence in the long run?

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