Use the Following to Answer Questions

question 94

Multiple Choice

Use the following to answer questions:
Figure: Short-Run Determination of the Interest Rate
-(Figure: Short-Run Determination of the Interest Rate) Look at the figure Short-Run Determination of the Interest Rate. If the money supply is at MS₂ and the Fed conducts contractionary monetary policy, in the short run the interest rate increases to r₁. In the long run prices will _____ the demand for money.

• A)decrease, decreasing
• B)decrease, increasing
• C)increase, decreasing
• D)increase, increasing

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Definitions:

Mood Swings

Rapid and often unexpected changes in emotional state, ranging from feelings of happiness to feelings of sadness or irritability.

Outbursts

are sudden, forceful expressions of emotion or activity, often as a result of pent-up feelings.

Self Management

The process of controlling one's own behavior, emotions, and thoughts in the pursuit of long-term goals.

Legitimate Power

The capacity to influence others by virtue of formal authority, or the rights of office.