Using the money demand and money supply model, an increase in ...

[captainjonesify]

Using the money demand and money supply model, an increase in money demand would cause the equilibrium interest rate to
 
  A) increase. B) decrease.
  C) not change. D) increase, then decrease.

Question 2

The price of digital cameras fell because of improvements in production technology. As a result, the demand for non-digital cameras decreased.
 
  This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further. Evaluate this statement.
  A) The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell.
  B) The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.
  C) The statement is false. A decrease in the price of digital cameras would decrease the demand for non-digital cameras, but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease.
  D) The statement is false because it confuses the law of demand with the law of supply.

[Joy Chen]

Answer to Question 1

A

Answer to Question 2

C

[captainjonesify]

Thank you

[Joy Chen]

No problemo