_____11. An interest elasticity of money demand value of two would mean: money d
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Question
_____11. An interest elasticity of money demand value of two would mean:
money demand is sensitive to changes in interest rates.
relatively small rise in interest rates would result in a significant decrease in money demand.
a relatively small drop in interest rates would result in a significant increase in money demand.
all of the above.
none of the above.
_____12. An increase in money supply shifts the:
LM schedule downward to the left.
LM schedule downward to the right.
LM schedule upward to the left.
LM schedule upward to the right.
The LM curve will shift into a fixed (vertical) position.
_____13. Which of the following statements are true:
At low income levels a significant change in interest rates are needed to restore equilibrium in the money market.
At low income levels a significant change in money supply is needed to restore equilibrium in the money market.
At low income levels only a slight change in interest rates are needed to restore equilibrium in the money market.
All statements are true.
No statements are true.
_____14. The LM curve shows the points of equilibrium in the money market between what two variable values?
income and output.
interest rates and aggregate demand.
money demand and money supply.
income and interest rates.
income and consumption.
_____15. Unlike the LM Curve which shows points of equilibrium in the money market, the IS curve shows points of equilibrium in the:
income market.
output market.
input market.
interest rate market.
demand market.
_____16. According to Keynes’ theory on the rigidity of money wages an employer during periods of falling output and profits would?
cut the level of money wages rather than the length of the work week.
continue to operate at a loss until economic conditions improve.
wait for voluntary layoffs among the workforce.
All of the above.
None of the above.
_____17. According to Keynesian Theory what factor will ultimately determine the level of employment?
income of the employer.
total output of the economy.
total real wage level.
interest rates on investment.
aggregate demand of the economy.
_____18. Unlike classical theory that believed labor supply was fixed, Keynesians believe that amount of labor supply depends on the current money wage and the expectations about the aggregate:
income level.
price level.
demand level.
supply level.
output level.
_____19. The declining marginal product of labor and the increasing upward pressure on money wages as output and employment increase explain why the Keynesian aggregate supply schedule is:
downward sloping.
horizontal.
vertical.
fixed.
upward sloping.
_____20. Hicks’ theory on compensation tests would be most similar to:
cost-benefit analysis.
input-output analysis.
supply-demand analysis.
marginal utility analysis.
division of labor analysis.
Explanation / Answer
Dear Student, only one question is allowed at a time.
11)
An interest elasticity of money demand value of two would mean:
A) money demand is sensitive to changes in interest rates.
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