Assume That the Money Demand Function Is (M/P)^d = 2,200

question 107

Multiple Choice

Assume that the money demand function is (M/P) ^d = 2,200 - 200r, where r is the interest rate in percent. The money supply M is 2,000 and the price level P is 2. If the price level is fixed and the supply of money is raised to 2,800, then the equilibrium interest rate will:

• A) drop by 4 percent.
• B) drop by 2 percent.
• C) drop by 1 percent.
• D) remain unchanged.

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Definitions:

Two Processors

A system configuration that involves two central processing units (CPUs) working together, often to increase performance or provide redundancy.

Actuator

A device used to convert a control signal into mechanical motion.

Discrete Output

Pertains to an output signal in automation systems that has only two states, commonly referred to as On or Off.

PLC

Programmable Logic Controller, an industrial digital computer which has been ruggedized and adapted for the control of manufacturing processes.