Assume That the Money Demand Function Is (M/P)d = 2,200

question 13

Multiple Choice

Assume that the money demand function is (M/P) d = 2,200 - 200r, where r is the interest rate in percent. The money supply M is 2,000 and the price level P is 2. If the price level is fixed and the supply of money is raised to 2,800, then the equilibrium interest rate will:

• A)drop by 4 percent.
• B)drop by 2 percent.
• C)drop by 1 percent.
• D)remain unchanged.

---

Definitions:

Cost of Goods Sold

The total cost directly associated with producing the goods sold by a company, including materials and labor.

PP&E (Net)

The net value of a company's Property, Plant, and Equipment after accounting for depreciation and amortization, representing the tangible assets used in operations.

Ending Balance

Ending balance refers to the amount of money remaining in a particular account at the conclusion of a given period, after all transactions have been accounted for.

Finished Goods

Items that have been completed by the manufacturing process, and are ready for sale to customers.