Suppose That Households Became Mistrustful of the Banking System and Decide

question 46

Multiple Choice

Suppose that households became mistrustful of the banking system and decide to decrease their chequing accounts and increase their holdings of currency.Using the money demand and money supply model and assuming everything else is held constant, the equilibrium interest rate should

• A)increase.
• B)decrease.
• C)not change.
• D)increase, then decrease.

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Definitions:

Social Behavior

Actions and interactions among individuals within a society, shaped by social norms, cultures, and structures.

Value-Free

The principle that the conduct and analysis of scientific research should be objective and unaffected by the personal values or biases of the researcher.

Laws Of Human Social Behavior

Principles that attempt to describe and predict how people interact within societies and how these interactions are regulated.

Enlightenment's Conceptualization

The process of understanding during the Enlightenment period, emphasizing reason, science, and human rights as the primary sources of legitimacy and authority.