If Money Demand Is Extremely Sensitive to Changes in the Interest

question 74

Multiple Choice

If money demand is extremely sensitive to changes in the interest rate,the money demand curve becomes almost horizontal.If the Fed expands the money supply under these circumstances,then the interest rate will

• A)fall substantially and investment and consumer spending will fall substantially.
• B)rise substantially and investment and consumer spending will rise substantially.
• C)fall substantially and investment and consumer spending will change very little.
• D)change very little and investment and consumer spending will change very little.

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Definitions:

Genital Stage

In psychoanalytic theory, the final stage of psychosexual development, typically beginning at puberty, where sexual interests mature into adult genital sexuality.

Personality States

Specific, temporary modes of behavior, thought, or emotion that can vary significantly from a person's usual baseline, influenced by situations or internal changes.

Persistent

The quality of continuing steadfastly or firmly in a course of action in spite of difficulty or opposition.

Humanistic Psychologists

Psychologists who focus on individual potential, stress personal growth and self-actualization, and emphasize the inherent goodness of people.