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:

General Journal

A comprehensive accounting record of all transactions made by a company, listed in chronological order and used in preparing financial statements.

Work Sheet

A document used by accountants to gather information for year-end financial reports, facilitating the preparation of financial statements and adjustments.

Work Sheet

An informal document used by accountants to organize and summarize financial data for the preparation of financial statements.

Financial Statements

Concise financial records that encapsulate a company's financial performance, position, and cash flows over a specific period.