According to both classics and Keynes, if, all else the same, the general price level increases by 5%, The demand for money will increase by 5%. Both the demand for and the supply of money will increase by 5%. The demand for money will increase by less than 5%. The demand for money will increase by more than 5%.

In the real world, if the Fed keeps pumping money into the economy at a rate of 10% per year, it will mostly create inflation in the long run. It will not have any effect on real GDP. True False

The price of a bond is $10,000 and it has a face value of $12,000. What is the interest rate on this bond? 2% 12% 20% 24%

A bond promises to pay $5,350 next year. The interest rate on this bond is 7%.The price of this bond today must be: $5,000 $5,100 $5,200 $5,240

According to Keynes, an increase in money supply by the Fed results in a lower interest rate. The lower interest rate in turn stimulates consumption and investment. This increase in aggregate demand then causes the real GDP to increase. True False