If the Demand Function for Money Is M/P = 0

question 73

Multiple Choice

If the demand function for money is M/P = 0.5Y - 100r and if M/P increases by 100, then the LM curve for any given interest rate shifts to the:

• A) left by 100.
• B) left by 200.
• C) right by 100.
• D) right by 200.

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Definitions:

Consumer Surplus

The discrepancy between what consumers are prepared and can afford to spend on a product or service versus what they end up paying.

Producer Surplus

The difference between the amount a producer is willing to accept for a good or service and the actual amount received when it is sold.

Economic Efficiency

The optimal allocation of resources to maximize productivity and meet consumer demand most effectively.

Credit Bureaus

Organizations that collect and maintain individual credit information, providing credit reports to lenders, employers, and others authorized to receive such information.