1 - The __ demand for money arises out of the need to hold money as a medium of exchange. this demand for money is a function of ____

A- Precautionary; interest rates

B- Transactions; national income

C - Speculative; interest rate

D - Precautionary; national income

2 - As the interest rate __, the opportunity cost of holding money ___ and individuals choose to hold ___ money.

A - increases, increases, more

B - decreases, decreases,more

C - increases, decreases, less

D - decreases, increases, more

3 - When aggregate planned expenditure is less then GDP, there is an unintended __ in inventories, firm's __ production and GDP begins to ___

A - Decrease, increase, increase

B- increase, decrease, decrease

C - increase, decrease, increase

D - decrease, increase, decrease

4 -In terms of the AD-AS model, a decrease in the interest rate leads to a (n) __ in investment spending a (n) ___ in aggregate spending a(n) __ in aggregate demand and eventually to a (n) ____ in total production and (or) a (n) ____ in the price level

A - decrease, decrease, decrease, decrease, decrease

B - increase, increase, increase, increase, increase

C - increase, increase, decrease, decrease, decrease

D- decrease, decrease, increase, increase, increase

5 - a justification for government intervention in the economy arises from the fact that market systems usually produce _ outcomes but they do not necessarily produce __ outcomes.

A - efficient, equitable

B - Equitable, efficient

C - Efficient, profitable

D - Profitable, equitable