If Real GDP Decreases, the Demand for Money Curve Will

question 109

Multiple Choice

If real GDP decreases, the demand for money curve will shift

• A) rightward and the interest rate will rise.
• B) leftward and the interest rate will fall.
• C) leftward and the interest rate will rise.
• D) rightward and the interest rate will fall.

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Definitions:

Sinking Funds

Reserves of money set aside by a corporation or government to repay a debt or bond issue at or before maturity.

Bondholder

An investor who owns bonds issued by a corporation or government, lending them money in exchange for periodic interest payments and the return of principal at maturity.

Issuer

An entity that issues or proposes to issue any security, or the entity on whose behalf the securities are issued.

Times-Interest-Earned Ratio

A financial ratio that measures a company's ability to meet its interest payments on outstanding debt.