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:

Future Value

The value of a current asset at a specified date in the future based on an assumed rate of growth or interest.

Ordinary General Annuity

An annuity in which the payment interval does not equal the compounding interval, and payments are made at the end of each payment interval.

Semi-annual Payments

Payments made twice a year, often in the context of loans, investments, or insurance premiums.

Discount Rate

The interest rate used in calculating the present value of future cash flows.