When the Fed decreases the money supply, interest rates

a. rise, causing velocity to fall.
b. fall, causing velocity to fall.
c. rise, causing velocity to rise.
d. fall, causing velocity to rise.

c

Economics

You might also like to view...

Some proponents of trade sanctions argue for changes in policy because they fear low standards will be used to capture markets and foreign investment. While theoretically possible, there is little or no support for the view that countries use low labor standards this way, because

A) countries with low labor standards generally have trouble attracting foreign investment. B) low standards can change a country's comparative advantage. C) it is impossible to lower labor standards. D) countries would not have an incentive to have low standards.

Economics

Answer the following statements true (T) or false (F)

1. In the foreign exchange market, if Americans significantly increase their investments in securities in British financial markets, one effect is that the dollar will tend to depreciate against the pound. 2. If the organizers of a major sports event set the ticket price above the equilibrium level, then scalping will develop in a secondary market for tickets. 3. The presence of ticket scalpers in popular events like concerts will hurt consumers who buy from the scalpers. 4. In cases where sellers have a fixed number of units of a product to sell, the supply curve will be horizontal. 5. In cases where the supply curve is vertical, any change in demand will cause only a change in price but no change in quantity.

Economics