In the Long Run, the Demand for Real Balances Rises

question 156

Multiple Choice

In the long run, the demand for real balances rises whenever:

• A) nominal interest rates fall.
• B) real GDP rises.
• C) the exchange rate rises.
• D) nominal interest rates fall and real GDP rises.

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Definitions:

Cash-Basis Taxpayer

A Cash-Basis Taxpayer is an individual or business that reports income and deductions in the year that they are actually received or paid, as opposed to when they are earned or incurred.

Accrual Basis

Accrual basis accounting is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Unemployment Compensation

Financial payments made to individuals who are unemployed through no fault of their own, intended to provide temporary financial assistance.

Jury Duty Pay

Compensation received by a juror for performing jury service in a court, which is considered taxable income.