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:

Manic Episode

A period of abnormally elevated mood, energy, and activity levels, often associated with bipolar disorder.

Bipolar Disorder

A mental health condition marked by extreme mood swings, including emotional highs (mania or hypomania) and lows (depression).

Unipolar Episode

A period characterized by a persistent depressed mood or loss of interest in activities, without the mood swings associated with bipolar disorder.

Depressive Episode

A period marked by severe symptoms of depression, such as profound sadness, lack of energy, and sleep disturbances, lasting for at least two weeks.