If the Demand for Money Decreases, but the Fed Keeps

question 79

Multiple Choice

If the demand for money decreases, but the Fed keeps the money supply the same, then:

• A)nominal interest rates will rise and aggregate supply will fall.
• B)both nominal interest rates and aggregate demand will increase.
• C)both nominal interest rates and aggregate demand will decrease
• D)nominal interest rates will fall and aggregate demand will increase.
• E)both nominal interest rates and aggregate supply will increase.

---

Definitions:

Economic Loss

This occurs when total costs exceed total revenue, leading to a negative profit situation.

Marginal Cost

The amount spent to produce an extra unit of a product or service.

Average Total Cost

The total cost divided by the quantity produced, representing the per-unit production cost.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced.