When the Supply of Money Saved Exceeds the Demand for Money

question 18

Multiple Choice

When the supply of money saved exceeds the demand for money, then banks will

• A) increase interest rates to attract more savers.
• B) lower interest rates to discourage savers.
• C) put money on sale by making loans more attractive.
• D) both A and B above.
• E) both B and C above.

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Definitions:

Zero-sum Game

A situation in competitive theory where one party's gain is exactly balanced by the losses of others. In a zero-sum game, the total benefit to all players in the game, for every combination of strategies, always adds up to zero.

Non-zero-sum Game

A scenario in game theory where the sum of outcomes for all players does not equal zero, allowing for mutual benefit or loss.

Equity Game

A scenario or experiment in psychology and economics that studies people's concepts of fairness and distribution of resources.

Moral Dilemmas

Situations in which a person must choose between two or more actions, each of which is morally demanding or where the right course of action is not immediately clear.