Suppose That Households Became Mistrustful of the Banking System and Decide

question 167

Multiple Choice

Suppose that households became mistrustful of the banking system and decide to decrease their checking 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:

Sleepwalking

A disorder occurring during deep sleep in which an individual performs activities they are normally capable of only while awake, with limited consciousness and recollection.

Sleeptalking

The act of speaking during sleep without being aware of it, a phenomenon that can occur in any stage of the sleep cycle.

Narcolepsy

A chronic sleep disorder characterized by overwhelming daytime drowsiness and sudden attacks of sleep, often accompanied by loss of muscle tone triggered by strong emotions (cataplexy).

Night Terrors

Intense episodes of fear that occur during sleep, often resulting in screaming, thrashing, and a high level of distress, typically not remembered upon awakening.