The classical view believes that ________
A) economies move slowly to their long run equilibrium levels
B) a rise in the quantity of money leads to increases in saving and investment
C) a rise in the quantity of money has no impact on economic activity
D) all of the above
E) none of the above
C
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Your weekly budget for gasoline and movie rentals is $45.00. Referring to the figure above, what is the price per gallon of gasoline?
A) $1.00 B) $1.25 C) $1.50 D) $1.75
The interest rate effect predicts that higher prices:
a. make it more expensive to borrow, leading to higher interest rates and less investment. b. make people worse off by reducing the value of their wealth, leading them to save more and spend less. c. decrease borrowing, leading to higher interest rates and less investment. d. decrease borrowing, leading to lower interest rates and more investment. e. increase borrowing, leading to higher interest rates and less investment.