For the next two questions, assume that national income (Y) increases from 200 to 400, all else the same: La=200-25(1), Lt=25(Y) with Y=400, and M=100 46. What would happen to interest rates (r)? a. Changes in income (Y) do not affected interest rates. b. The equilibrium interest rate would rise from 6% to 8%. c. The equilibrium interest rate would fall from 4% to 6%. d. Both B and C of the above are correct. 47. At the new equilibrium interest rate (r), which of the following would be correct? a. Desired money balances would have decreased at each interest rate level. b. The assets demand for money would have increased at each interest rate level. c. The transactions demand for money would have decreased at each interest rate level. d. The transaction demand for money would have increased at each interest rate level.

For the next two questions, assume that national income (Y) increases from 200 to 400, all else the same: La=200-25(1), Lt=25(Y) with Y=400, and M=100 46. What would happen to interest rates (r)? a. Changes in income (Y) do not affected interest rates. b. The equilibrium interest rate would rise from 6% to 8%. c. The equilibrium interest rate would fall from 4% to 6%. d. Both B and C of the above are correct. 47. At the new equilibrium interest rate (r), which of the following would be correct? a. Desired money balances would have decreased at each interest rate level. b. The assets demand for money would have increased at each interest rate level. c. The transactions demand for money would have decreased at each interest rate level. d. The transaction demand for money would have increased at each interest rate level.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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