If Money Demand Changes for Some Reason Other Than a Spending

question 115

Multiple Choice

If money demand changes for some reason other than a spending shock,the Fed can stabilize

• A) GDP without changing the interest rate
• B) GDP,but at the expense of interest rate stability
• C) GDP by keeping the interest rate stable
• D) the price level by keeping the interest rate stable
• E) the price level and GDP by stabilizing the interest rate

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Definitions:

Break-even Level

The point at which total costs equal total revenues, resulting in neither profit nor loss.

Variable Costs

Expenses that change in proportion to the amount of goods produced or the volume of sales.

Fixed Costs

Expenses that do not change with the level of production or sales in the short term, such as rent or salaries.

Unit Selling Price

The amount of money charged to the customer for a single unit of a product or service.