Refer to the Above Table

question 178

Multiple Choice

Refer to the above table.Suppose the transactions demand for money is $300 billion and the money supply is $700 billion.A decrease in the money supply to $600 billion would cause the interest rate to:

• A)rise to 7 percent.
• B)rise to 6 percent.
• C)fall to 4 percent.
• D)fall to 5 percent.

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Definitions:

Good X

A placeholder term used to represent any market commodity or product for the sake of economic analysis or discussion.

Income

Total earnings derived from labor, investments, and any other source, typically discussed in the context of individuals or households.

Income

Funds accrued regularly from work performed or assets invested.

Good Y

Typically used in economics as an arbitrary designation for a commodity or product in theoretical models and analysis.