The Demand for Money Is Likely Downward Sloping Because

question 87

Multiple Choice

The demand for money is likely downward sloping because

• A)interest sensitive consumption and business investment are both negatively impacted by increases in the interest rate.
• B)interest sensitive consumption and business investment are both positively impacted by increases in the interest rate.
• C)the marginal revenue product of labor is decreasing.
• D)the government can always borrow what it wants.

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Definitions:

Price Index

A statistical measure that shows changes in the price level of a basket of goods and services over time, used to gauge inflation.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Inflation

A continuous rise in the overall price level of goods and services within an economy over a period.

Unemployment

The condition in which a capable worker who is actively seeking employment is unable to find work.