If Banks Start Paying Higher Interest Rates on Checking Accounts

question 140

Multiple Choice

If banks start paying higher interest rates on checking accounts, we would expect, assuming everything else held equal,

• A)the demand for money to become more sensitive to changes in the interest rate.
• B)the demand for money to become horizontal.
• C)the relationship between interest rates and the demand for money to be unaffected.
• D)the demand for money to become less sensitive to changes in the interest rate.
• E)a decrease in the supply of money.

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Definitions:

Flexible Approach

An adaptable and responsive strategy in business, personal planning, or problem solving that allows for modifications based on changing conditions.

Managerial Thinking

The cognitive process involved in planning, decision making, and problem solving within a management context.

Certainty

The state of being completely confident or having an absolute conviction about something, with no doubts.

Innovating

The process of creating new methods, ideas, or products that bring about significant improvements or solve problems in unique ways.