If the Proportion of GDP That People Choose to Hold

question 144

Multiple Choice

If the proportion of GDP that people choose to hold in the form of money balances is 0.25,then a $100 increase in the money supply will lead to a rightward shift in the LM curve in the amount of

• A)$400.
• B)$ 25.
• C)$ 75.
• D)$100.

---

Definitions:

Balance Sheet

A financial statement that presents a company's assets, liabilities, and equity at a specific point in time.

Cash and Cash Equivalents

Liquid assets that can be quickly turned into exact amounts of cash with very little chance of value variation over the short term.

Treasury Bonds

Long-term government securities issued with a fixed interest rate and maturity date, typically used to finance national debt.

Brokerage Commission

The fee charged by a broker for executing transactions or providing specialized services.