If Price Expectations Are Assumed to Be Correct, Money Demand

question 39

Multiple Choice

If price expectations are assumed to be correct, money demand is proportional to income, and net capital flow is infinitely elastic, then the big, comprehensive model in the appendix to Chapter 14 corresponds to which of the following special cases?

• A)classical closed economy
• B)classical open economy
• C)IS-LM model
• D)Mundell-Fleming model with floating exchange rate

---

Definitions:

Defect

A flaw or imperfection in a product or system that causes it to be unsafe, ineffective, or fails to meet specified criteria.

Consigned Goods

Items that are given to a third party (consignee) to sell, where the original owner (consignor) retains ownership until the goods are sold.

Possession

The actual holding or control of property, whether owned or not.

Risk Of Loss

Pertains to the contractual and legal responsibility for the loss, damage, or destruction of goods during transportation or transaction.