It Is Assumed That Households and Businesses Want to Hold

question 160

Multiple Choice

It is assumed that households and businesses want to hold for transactions purposes an amount of money equal to one-half of the GDP.The table shows the amounts of money that households and businesses want to hold as an asset at various interest rates.

-Refer to the information above.If the GDP is $300 and the supply of money is $230,the equilibrium interest rate will be:

• A) 8 percent.
• B) 6 percent.
• C) 2 percent.
• D) 4 percent.

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Definitions:

Attitude Formation

The process through which individuals develop their views and opinions about something.

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, or preferences.

Motivation

The internal drive or external stimulus that prompts an individual to act or behave in a certain manner towards achieving a goal.

Perceived Risk

The anxiety felt because the consumer cannot anticipate the outcomes of a purchase but believes there may be negative consequences.