If the Money Demand Function Is Given by M^d =

question 27

Multiple Choice

If the money demand function is given by M^d = 10 + 0.2Y − 10r then a 10-unit increase in the quantity of money will cause the LM schedule to shifts to

• A)to the right by 10 units.
• B)the right by 50 units.
• C)to the left by 40 units.
• D)to the left by 50 units.
• E)to the right by 40 units.

---

Definitions:

Consumer Surplus

The divergence between the expected payment by consumers for a product or service and the actual payment made.

Producer Surplus

The difference between the amount producers are willing and able to supply goods for versus the amount they actually receive due to market prices.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net gain to society from the production and consumption of goods and services.

Tariff Revenue

Income that a government collects from imposing duties on imported goods.