In the short run, what would be the result of an increase in the monetary base? Assume the reserve ratio is unchanged. O a. Demand for money decreases. O b. Demand for money increases. O c. Quantity demanded of money decreases. O d. Price level decreases. O e. Nominal interest rate falls.
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- All of the following shift the demand for money curve EXCEPT O a. an improvement in financial technology. O b. a rise in the nominal interest rate. a decrease in real GDP. O d. an increase in the price level. O e. an increase in real GDP.Refer to the money demand curve. Given the money demand curve, Mp, an increase in the quantity of money demanded from Mo to M, can be caused by O A. an increase in the price level. O B. decrease in the rate of interest. O C. an increase in the rate of interest. O D. a decrease in the price level. Mp Mo Quantity of Money M1When the nominal interest rate falls, the opportunity cost of holding money O A. decreases and there is a movement downward along the demand for money curve. O B. increases and there is a movement upward along the demand for money curve. OC. decreases and the demand for money curve shifts rightward. D. decreases and the demand for money curve shifts leftward. O E. increases and the demand for money curve shifts rightward.
- Which of the following statements about money that is correct? O A. Credit cards and debit cards are examples of money. B. Deposits are money because they can be used to make payments. O C. Inflation brings a rising value of money. O D. Money is a completely stable store of value.Which of the following would lead to a decrease in the equilibrium interest rate? O a. Decrease the money demand O b. Decrease the money supply Ос. Increase in money demand O d. Increase the money supply O e. Directly lower the interest rate and change neither the money demand nor the money supplyWhich of the following statements best explains why the money demand curve slopes downward? Select one: O a. At high interest rates, the opportunity cost of holding money is low, so people want to hold more. O b. As GDP increases, the demand for money tends to decrease, resulting in a negatively sloped curve. At low interest rates, the opportunity cost of holding money is low, so people want to hold more. O d. At high interest rates, people want to hold more money, so they don't have to borrow to make purchases.
- According to the Quantity Theory of Money, if the velocity of money is constant, and if the money supply increases, while at the same time real GDP decreases, then, ceteris paribus, it follows that in the long run: Select one: O a. the price level will increase - i.e. the economy will experience inflation. O b. the price level will decrease - i.e. the economy will experience deflation. O c. nominal GDP must be decreasing. O d. none of the above is mathematically possible.Q Search t 0 m* m m' quantity of money Exhibit 15.2 shows equilibrium in a money market. Which of the following will be observed if the money supply curve shifts from S to S* while the rate of interest remains at "r"? O a. The Fed will sell U.S. Treasury securities. O b. There will be an excess supply of money. O c. The money market equilibrium will move from point B to point C. Od. There will be an excess demand for money. Oe. The money market equilibrium will move from point C to point A. bike 2.jpg bike 2 ENG @)) interest rate IDI R Q 5 & 7 bike jpg.jpg * + * 00 8 14 O KAA ( f10 Sindicates that, in the long run, if the money supply increases at a slower rate than real GDP, there will be _ in the price level. Select one: O A. The equation of exchange; an increase O B. The quantity theory of money; an increase O . The equation of exchange; a decrease O D. The quantity theory of money; a decrease
- In the long run, when the Fed increases the quantity of money, the O demand for money decreases. O nominal interest rate falls. O price level rises. O real interest rate rises. O price level falls.Trevor goes to the ATM machine and withdraws $500 in cash. How will this affect the monetary base? Select one: O a. The monetary base will decline as bank reserves fall. O b. The monetary base will increase with the increase in currency in circulation. O c. The monetary base will increase by less than the size of the withdrawal as the increase in the currency in circulation will not be completely offset by a decrease in bank reserves. O d. The monetary base will remain unchanged with the increase in the currency in circulation being exactly offset by a decrease in bank reserves.With a constant rate of inflation and an increasing money supply, interest rates can remain stable because... a. The rising price level is increasing the demand for money, offsetting the impact of the rising money supply. O b. The declining interest rates cause the investment demand curve to shift to the left, which causes interest rates to rise. Oc. The rising price level is decreasing the demand for money which is pushing interest rates up. O'd. The declining interest rates cause the investment demand curve to shift to the right, which causes interest rates to rise. O e. The money transmission mechanism does not apply in a situation of sustained inflation.
