Which of the following statements is correct?
A. In the short run, output is determined by the amount of capital, labor, and technology; the interest rate adjusts to balance the supply and demand for money; the price level adjusts to balance the supply and demand for loanable funds.
B. In the short run, output is determined by the amount of capital, labor, and technology; the interest rate adjusts to balance the supply and demand for loanable funds; the price level adjusts to balance the supply and demand for money.
C. In the short run, output responds to the aggregate demand for goods and services; the interest rate adjusts to balance the supply and demand for money; the price level is stuck.
D. In the short run, output responds to the aggregate demand for goods and services; the interest rate adjusts to balance the supply and demand for loanable funds; the price level adjusts to balance the supply and demand for money.
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Which of the following shifts money demand to the right?
A. an increase in the price level
B. a decrease in the price level
C. an increase in the interest rate
D. a decrease in the interest rate
According to liquidity preference theory, if the price level decreases, then
A. the interest rate falls because money demand shifts right.
B. the interest rate falls because money demand shifts left.
C. the interest rate rises because money supply shifts right.
D. the interest rate rises because money supply shifts left.
Other things the same, as the price level rises
A. the interest rate rises causing aggregate demand to shift.
B. the interest rate rises causing a movement along a given aggregate demand curve.
C. the interest rate falls causing aggregate demand to shift.
D. the interest rate falls causing a movement along a given aggregate demand curve.
Open-market purchases
A. increase investment and real GDP.
B. decrease investment and increase real GDP.
C. increase investment and decrease real GDP.
D. decrease investment and real GDP.
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