The higher the interest rate, the greater the preference for liquidity. True Fal
ID: 1219430 • Letter: T
Question
The higher the interest rate, the greater the preference for liquidity. True False The demand for money is a relationship between: A. the interest rate and how much money people choose to hold. B. the price level and the actual output produced in an economy. C. the price level and the amount of cyclical unemployment. D. the interest rate and how much money people earn during a certain time period. In the aggregate demand-aggregate supply model in the short run, an increase in the money supply will lead to a(n): A. decrease in real GDP and an increase in the price level. B. decrease in both the price level and real GDP. C. increase in real GDP and a decrease in the price level. D. increase in both the price level and real GDP. When the Fed decreases the money supply: A. aggregate supply increases, which leads to movement along the aggregate demand curve. B. aggregate demand decreases, which leads to movement along the short-run aggregate supply curve. C. aggregate demand and aggregate supply both increase. D. aggregate demand increases, which leads to movement along the short-run aggregate supply curve. Which of the following reasons explains why many countries with relatively small populations import automobiles from Japan, U.S., and Germany rather than produce them domestically? A. Import quotas B. Differences in tastes C. Economies of scale D. Differences in resource endowments Tariffs and quotas: A. are imposed when there are differences in the opportunity cost of production across countries. B. reduce both consumer surplus and producer surplus in the exporting country. C. reduce consumer surplus and increase producer surplus in the importing country. D. increase consumer surplus and reduce producer surplus in the importing country. Some countries export products at prices below the cost of production or the price charged in the domestic market. This practice is called: A. import substitution. B. cream skimming. C. monopoly pricing. D. dumping.Explanation / Answer
a) The higher interest rate induces to save more. so less liquidity
b) Md is relation between interest rate and people demand for money
c) increases in money supply decreases price level and increases GDP
d)money supply decrease cause AS curve shift inward therefore a movement along AD curve
e) economies of scale
f)when there is difference in oppurtunty cost of production across countries
g)dumping
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