Author Question: When the nominal interest rate rises, the quantity of money demanded decreases because A) people ... (Read 78 times)

altibaby · **on:** Jun 29, 2018

When the nominal interest rate rises, the quantity of money demanded decreases because

A) people will buy fewer goods and hence hold less money.
B) the price level also rises and people decrease their demand for money.
C) people shift funds from interest-bearing assets into money.
D) people shift funds from money holdings to interest-bearing assets.

Question 2

The government raises the sales tax on shirts. The tax is imposed on sellers. As a result, the ________.

A) supply curve of shirts shifts leftward
B) supply curve of shirts shifts rightward
C) demand curve for shirts becomes vertical
D) demand curve for shirts becomes horizontal