Question 31 The interest-rate effect Answer depends on the idea that increases in interest rates decrease the quantity of goods and services demanded. depends on the idea that increases in interest rates decrease the quantity of goods and services supplied. is responsible for the downward slope of the money-demand curve. is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve. Question 32 The wealth effect stems from the idea that a higher price level Answer increases the real value of households’ money holdings. decreases the real value of households’ money holdings. increases the real value of the domestic currency in foreign-exchange markets. decreases the real value of the domestic currency in foreign-exchange markets.
Question 31
The interest-rate effect
Answer
depends on the idea that increases in interest rates decrease the quantity of goods and services demanded.
depends on the idea that increases in interest rates decrease the quantity of goods and services supplied.
is responsible for the downward slope of the money-
is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.
Question 32
The wealth effect stems from the idea that a higher price level
Answer
increases the real value of households’ money holdings.
decreases the real value of households’ money holdings.
increases the real value of the domestic currency in foreign-exchange markets.
decreases the real value of the domestic currency in foreign-exchange markets.
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