As Aggregate Output Rises,the Demand for Money ________ and the Interest

question 93

Multiple Choice

As aggregate output rises,the demand for money ________ and the interest rate ________,so that money demanded equals money supplied and the money market is in equilibrium.

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

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Definitions:

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Good

A tangible product or commodity that satisfies human wants or needs.

Resources

An input used to produce economic goods. Land, labor, skills, natural resources, and human-made tools and equipment provide examples. Throughout history, people have struggled to transform available, but limited, resources into things they would like to have—economic goods.

Demand Falls

This occurs when there is a decrease in the desire or willingness of consumers to purchase a good at a given price, leading to potential shifts in the market equilibrium.