If Consumption Depends Positively on the Level of Real Balances

question 106

Multiple Choice

If consumption depends positively on the level of real balances and real balances depend negatively on the nominal interest rate in a neoclassical model, then the nominal interest rate:

• A) declines when the money growth rate rises.
• B) is unchanged when the money growth rate rises.
• C) rises 1 percent for each 1 percent rise in the money growth rate.
• D) rises less than 1 percent for each 1 percent rise in the money growth rate.

---

Definitions:

Resting Membrane Potential

The electric potential difference across the membrane of a resting (non-active) cell, essential for the transmission of nerve impulses.

Plasma Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, which regulates the movement of substances in and out of the cell.

Membrane Potential

The voltage difference across a cell's plasma membrane, crucial for the conduction of electrical signals in nerve and muscle cells.

Threshold

The minimum level of stimulus intensity required to activate a neuron or to trigger a physiological response.