The LM curve slopes upward to the right because
A) the demand for money plus the demand for nonmoney assets must equal the supply of money plus the supply of nonmoney assets.
B) a higher real interest rate is associated with a higher level of the output gap in money market equilibrium.
C) a higher real interest rate is associated with a higher level of saving in goods market equilibrium.
D) in equilibrium the actual real interest rate must increase one-for-one with expected real interest rate.
B
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The midpoint formula is used to measure the elasticity of demand between two points on a demand curve
A) when demand is elastic. B) to ensure that the elasticity has a negative value. C) to ensure that we have only one value of the price elasticity of demand between two points on a demand curve. D) in special cases when the percentage change in the quantity demanded is equal to the percentage change in price.
Which type of U.S. government security is a kind of zero-coupon security?
A) Federal funds note B) U.S. Treasury note C) U.S. Treasury bill D) U.S. Treasury bond