If Both the Demand for Money and the Supply of Money

question 63

Multiple Choice

If both the demand for money and the supply of money increase,what can we conclude will happen to the equilibrium?

• A)The interest rate will fall,but the effect on quantity of money is indeterminate.
• B)The interest rate will rise,but the effect on the quantity of money is indeterminate.
• C)The quantity of money will increase,but the effect on the interest rate is indeterminate.
• D)The quantity of money will fall,but the effect on the interest rate is indeterminate.
• E)Both the interest rate and the quantity of money will increase.

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Definitions:

Open System

A concept in systems theory where an organization is seen as being open to, and interacting with, its environment in a dynamic exchange of information, energy, and resources.

Resource Inputs

The resources (such as time, money, materials, and labor) that are utilized in the production process or in the provision of services.

Outputs

The results or products that emerge from a system, process, or activity, measuring its effectiveness or productivity.

Tight Bureaucracy

A highly structured and rule-oriented form of organization where the adherence to formal procedures and hierarchies is emphasized.