Figure 34-4

question 173

Multiple Choice

Figure 34-4.On the figure,MS represents money supply and MD represents money demand.
-Refer to Figure 34-4.Suppose the current equilibrium interest rate is r₃.Let Y₃ represent the corresponding quantity of goods and services demanded,and let P₃ represent the corresponding price level.Starting from this situation,if the Federal Reserve decreases the money supply and if the price level remains at P₃,then

• A)there will be an increase in the equilibrium quantity of goods and services demanded.
• B)there will be a decrease in the equilibrium interest rate.
• C)the aggregate-demand curve will shift to the right.
• D)fewer firms will choose to borrow to build new factories and buy new equipment.

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Definitions:

Predictive Validity

The extent to which a test's scores accurately forecast or correlate with future behavior, performance, or outcomes.

Concurrent Validity

The degree to which the results of a particular test or measurement correlate with those of a previously validated measure taken at the same time.

Content Validity

The extent to which a test measures all aspects of the content it's intended to cover.

Kuder-Richardson Reliability

A measure of the consistency of test scores across items within a test, commonly used to assess the reliability of dichotomously scored tests.