17903458
Question 1
Question
The demand for money that households keep for emergency purposes is known as-
Answer
-
precautionary demand
-
emergency demand
-
speculative demand
-
temporary demand
Question 2
Question
The quantity of money held in response to interest rates is the-
Answer
-
transactions motive for holding money
-
precautionary motive for holding money
-
speculative motive for holding money
-
unit-of-account motive for holding money
Question 3
Question
the specualtive demand for money
Answer
-
varies inversely with income
-
is only concerned with active money
-
involves holding money for unexpected problems
-
varies directly with the transactions demand for money
-
varies inversely with the interest rate
Question 4
Question
Other things being equal, the quantity of money that people wish to hold can be expected to -
Answer
-
increase as the interest rate increases
-
decrease as the interest rate increases
-
decrease as real GDP increases
-
none of the answers above are correct
Question 5
Question
A decrease in the interest rate, other things being equal, causes a(n)-
Answer
-
upward movement along the demand curve for money
-
downward movement along the demand curve for money
-
rightward shift of the demand curve for money
-
leftward shift of the demand curve for money
Question 6
Question
Which of the following statements is true?
Answer
-
The speculative demand for money at possible interest rates gives the demand for money curve its upward slope
-
there is an inverse relationship between the quantity of money demanded and the interest rate
-
according to the quantity theory of money, any change in the money supply will have no effect on the price level
-
all of the answers above are correct
Question 7
Question
In exhibit 20-11, assume an equilibrium with an interest rate of 6% and the money supply at $400 billion. The fed uses its policy tools to move the economy to a new equilibrium at E2, with money supply of $600 billion and an interest rate of 4%. This change could be the result of a(n)-
Answer
-
open market sale of securities by the fed
-
higher discount rate set by the fed
-
higher required-reserve ratio set by the Fed
-
open market purchase of securities by the fed
Question 8
Question
according to Keynesians, an increase in the money supply will-
Answer
-
decrease the interest rate, and increase investment, aggregate demand, prices, real GDP, and employment.
-
decrease the interest rate, and decrease investment, aggregate demand, prices, real GDP. and employment.
-
increase the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment
-
only increase prices
Question 9
Question
In Exhibit 20-12 , when the money supply increases from MS1 to MS2, the equilibrium interest rate-
Answer
-
remains unchanged
-
increases from i1 to i2, increasing investment spending from I1 to I2
-
increases from i2 to i1, decreasing investment spending from I2 to I1
-
decreases from i1 to i2, increasing investment spending from I1 to I2
Question 10
Question
In exhibit 20-12, a shift in aggregate demand from AD1 to AD2
Answer
-
cannot raise real GDP because the economy is at full employment
-
cannot raise real GDP because the aggregate supply curve is upward sloping at GDP2
-
will raise real GDP because the economy is operating below the full-employment level
-
will cause the interest rate to increase from i2 to i1
Question 11
Question
The transactions demand for money is the demand for money by households for
Answer
-
rainy day spending
-
predictable spending purposes
-
liquidity purposes
-
investing purposes
Question 12
Question
People react to an excess supply of money by-
Answer
-
selling bonds, thus driving up the interest rate
-
selling bonds, thus driving down the interest rate
-
buying bonds, thus driving up the interest rate
-
buying bonds, thus driving down the interest rate
Want to create your own Quizzes for free with GoConqr? Learn more.