If the Interest Rate Increases

question 178

Multiple Choice

If the interest rate increases

• A)or if the price level increases, then people will want to hold more money.
• B)or if the price level increases, then people will want to hold less money.
• C)or if the price level decreases, then people will want to hold more money.
• D)or if the price level decreases, then people will want to hold less money.

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Definitions:

Market Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded in the market.

Normal Profit

The level of profit that is just sufficient to keep an entrepreneur in business, equaling total revenues minus explicit and implicit costs.

Price System

An economic mechanism wherein prices are determined by the interaction of supply and demand, guiding the allocation of resources and distribution of goods and services.

Scarce Goods

Items that are limited in availability relative to the desires or needs of consumers.