Assume That the Money Demand Function Is (M/P)^d = 2,200

question 121

Multiple Choice

Assume that the money demand function is (M/P) ^d = 2,200 - 200r,where r is the interest rate in percent.The money supply M is 2,000 and the price level P is 2.If the price level is fixed and the Bank of Canada wants to fix the interest rate at 7 percent,it should set the money supply at:

• A) 2,000.
• B) 1,800.
• C) 1,600.
• D) 1,400.

---

Definitions:

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first ones sold; stands for Last-In, First-Out.

Physical Count

The process of manually counting the actual inventory on hand at a specific point in time to verify stock levels and accuracy of records.

Perpetual Inventory System

An accounting approach that continuously updates inventory records for sales and purchases, providing a real-time view of inventory levels.

Physical Inventory

The process of counting all the physical goods and materials a company has in its possession at a certain point in time, often done annually.