If the Demand for Money Depends on the Interest Rate

question 26

Multiple Choice

If the demand for money depends on the interest rate, then a 15% increase in the money supply will increase

• A) nominal GDP by 15%.
• B) nominal GDP by less than 15%.
• C) nominal GDP by more than 30%.
• D) real GDP by 30%.

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Definitions:

Oil Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately reduces the heat generated when the surfaces move.

Factory Machinery

Fixed assets used in the production of goods, including machines and equipment in a manufacturing facility.

Direct Material

Raw materials that are directly involved in the production process of a product and can be easily traced to it.

Steel

An alloy of iron and carbon (and possibly other elements) that is hard, strong, and used as a structural and fabrication material.