Economists Who Favor the Use of Interest Rates as an Indicator

question 10

Multiple Choice

Economists who favor the use of interest rates as an indicator of monetary tightness argue that an increase in the demand curve for money

• A) is difficult to accommodate unless banks are willing to hold excess reserves.
• B) signals an impending recession unless interest rates are allowed to rise.
• C) leads to a recession unless the quantity of money is increased.
• D) results in increased inflationary pressures unless interest rates are allowed to rise.
• E) results in a recession unless the quantity of money is reduced.

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