Suppose That the Demand and Supply of Money Are Initially

question 94

Multiple Choice

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

• A)adopt an expansionary monetary policy.
• B)adopt a contractionary monetary policy.
• C)increase the demand for money.
• D)decrease the demand for money.
• E)give up pursuing both goals at the same time.

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Definitions:

Median

The score that falls in the middle of all the scores on the test; also called the 50th percentile.

Predictive Validity

When a scale is related to a concrete outcome or behavior.

Discriminant Validity

The extent to which a construct is truly distinct from other constructs by empirical standards, often assessed through its lack of correlation with unrelated constructs.

Convergent Validity

When a scale correlates with other scales measuring the same construct.