The Introduction of Automatic Teller Machines, Which Reduces the Demand

question 72

Multiple Choice

The introduction of automatic teller machines, which reduces the demand for money, will, according to the Mundell-Fleming model with floating exchange rates, lead to:

• A) no change in income and net exports.
• B) no change in income but a rise in net exports.
• C) a rise in income but no change in net exports.
• D) a rise in both income and net exports.

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Definitions:

Free Market

An economic system in which prices are determined by unrestricted competition between privately owned businesses.

Economic Growth

The increase in the inflation-adjusted market value of the goods and services produced by an economy over time, often measured as the percentage increase in real gross domestic product (GDP).

Neoclassical School

An economic theory that emphasizes the role of supply and demand in determining the price and quantity of goods and services offered in a market, focusing on rational behavior and equilibrium.

Capitalism

An economic system where private individuals own and control trade and industry instead of the state.