If the Economy Is Currently in Monetary Equilibrium, an Increase

question 23

Multiple Choice

If the economy is currently in monetary equilibrium, an increase in the money supply will

• A)cause an excess demand for money and a decrease in the rate of interest.
• B)cause a reduction in the demand for money, leading to a higher rate of interest.
• C)not change the equilibrium conditions.
• D)lead to a movement down the money demand curve to a lower rate of interest.
• E)cause an increase in the demand for money, leading to a lower rate of interest.

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Definitions:

Avoidance

A behavior aimed at preventing unpleasant situations or outcomes.

Stimulus Generalization

The tendency for the conditioned response to be evoked by stimuli that are similar to the stimulus that was conditioned originally.

Conditioned Stimulus

A stimulus that was neutral but, after being paired with an unconditioned stimulus, begins to provoke a conditioned response.

Temporal Contiguity

The occurrence of two events close together in time, which can lead to an association between them in learning.