Suppose that the supply of money were fixed and gdp rose. To maintain the equality of supply and demand in the money market, price level would have to rise if interest rates are to be held constant interest rates would have to fall if prices are to be held stable prices and interest rates would both have to fall interest rates would have to rise if prices are to be held stable nothing else would have to happen
Suppose that the supply of money were fixed and gdp rose. To maintain the equality of supply and demand in the money market, price level would have to rise if interest rates are to be held constant interest rates would have to fall if prices are to be held stable prices and interest rates would both have to fall interest rates would have to rise if prices are to be held stable nothing else would have to happen
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that the supply of money were fixed and
price level would have to rise if interest rates are to be held constant
interest rates would have to fall if prices are to be held stable
prices and interest rates would both have to fall
interest rates would have to rise if prices are to be held stable
nothing else would have to happen
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