When we have inflation, the opportunity cost of holding nominal money balances is
A) the real interest rate
B) the nominal interest rate
C) the nominal interest rate or the inflation rate, whichever is higher
D) the nominal interest rate minus the rate of inflation
E) the yield on long-term government bonds
Correct Answer:
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Q25: If the income elasticity of money demand
Q26: The speculative demand for money
A)can clearly be
Q27: If real GDP increased by 3% over
Q28: The demand for money for precautionary reasons
A)increases
Q29: If interest rates are currently very high
Q31: Assume the economy goes into a recession.We
Q32: The demand for money (M2) remained relatively
Q33: Empirical studies done on money demand established
Q34: If income taxes are lowered, we can
Q35: Assume that interest rates drop and GDP
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