In order to reduce the nominal interest rate, the central bank: reduces the money supply raises the money demand reduces the money demand raises the money supply
In order to reduce the nominal interest rate, the central bank: reduces the money supply raises the money demand reduces the money demand raises the money supply
Chapter1: Making Economics Decisions
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Problem 1QTC
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![In order to reduce the nominal interest rate, the central bank:
reduces the money supply
raises the money demand
reduces the money demand
raises the money supply](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe806c6de-9c77-40e2-a02e-3d58c6f3d9d9%2Fe3ef2188-c514-4f03-ba70-ec548e2a0790%2Fmnz6d3n_processed.png&w=3840&q=75)
Transcribed Image Text:In order to reduce the nominal interest rate, the central bank:
reduces the money supply
raises the money demand
reduces the money demand
raises the money supply
![The opportunity cost of holding money (what households are giving
up by holding their wealth in the form of money instead of other
assets) is:
the real interest rate
the inflation rate
the nominal interest rate
minus the inflation rate](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe806c6de-9c77-40e2-a02e-3d58c6f3d9d9%2Fe3ef2188-c514-4f03-ba70-ec548e2a0790%2Flo8spic_processed.png&w=3840&q=75)
Transcribed Image Text:The opportunity cost of holding money (what households are giving
up by holding their wealth in the form of money instead of other
assets) is:
the real interest rate
the inflation rate
the nominal interest rate
minus the inflation rate
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