What are the two reasons that people want to hold money? In other words, what are the two types of demand for money?
What will be an ideal response?
People want to hold money for transactions purposes and as a form of liquid assets. Thus, economists talk about a transactions demand for money and an asset demand for money.
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Between 1980 and 2014, income inequality in the United States has increased in part due to rapid technological change. How does technological change contribute to income inequality?
A) Advancements in technology displace skilled and unskilled workers in certain fields, leading to higher unemployment rates. B) The opportunity cost of investing in technology is investments in human capital. The resulting decrease in labor's marginal productivity has led to lower wages. C) Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers. D) Technological change favors the owners of capital and since high-income individuals tend to own capital, income inequality is further exacerbated.
Contractionary monetary policy will result in
A) higher interest rates. B) increased rates of inflation. C) a leftward shift in the long-run Phillips curve. D) an upward shift in the short-run Phillips curve.