A. How much cash do you wish you could have?
B. How much wealth would you like?
C. How much income would you like to earn?
D. What proportion of your financial assets do you want to hold in non-interest-bearing forms
Money, Interest Rates And Output
Which of the following events will lead to a decrease in the equilibrium interest rate ?
A. A sale of government securities by the central bank
B. An increase in the level of aggregate output
C. An increase in the discount rate
D. A decrease in the price level
The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
A. Transactions motive
B. precautionary motive
C. profit motive
D. speculation motive
The demand for money represents the idea that there is ?
A. a positive relationship between the interest rate and the quantity of money demanded
B. a negative relationship between the price level and the quantity of money demanded
C. a negative relationship between the level of aggregate output and the quantity of money demanded
D. a negative relationship between the interest rate and the quantity of money demanded
The equilibrium level of aggregate output is determined in ?
A. the goods and labor markets.
B. the goods market
C. the money markets
D. the money and labor market
The interest rate is determined in ?
A. the money and labor markets
B. the goods and labor markets
C. the goods market
D. the money markets
An example of an expansionary monetary policy is ?
A. a reduction in the taxes banks pay on their profits.
B. an increase in the required reserve ratio
C. an increase in the discount rate
D. the Central bank buying government securities in the open market
If the investment demand curve is vertical ?
A. both monetary and fiscal policy are ineffective
B. monetary policy is effective but fiscal policy is ineffective
C. monetary policy is ineffective but fiscal policy is effective
D. both monetary and fiscal policy are effective
If The Central bank tries to keep the interest rate constant when the economy is operating on the steep part of the AS curve, ……… will occur?
A. a hyperinflation
B. a depression
C. stagflation
D. a recession
The idea the government spending causes a reduction in private investment is called ?
A. fiscal drag
B. investment blight
C. crowding-out
D. the Thatcher effects