If People Expect Nominal Interest Rates to Be Lower in the Future,the

question 59

Multiple Choice

If people expect nominal interest rates to be lower in the future,the expected return to bonds ________,and the demand for money ________.

• A)increases;increases
• B)increases;decreases
• C)decreases;increases
• D)decreases;decreases

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Definitions:

Fully Employed

A situation in which all available labor resources are being used in the most economically efficient way.

Production Possibilities Frontier

Represents the maximum potential output of two goods or services an economy can produce when all resources are used efficiently, graphically illustrating opportunity costs and economic efficiency.

Outputs

The goods or services produced by a company or an economy over a certain period of time.

Increasing Opportunity Costs

A principle stating that as the production of a good increases, the opportunity cost of producing an additional unit of this good also increases.