Holding money gives a advantage ________.A. bereason it is a way of paymentB. because its possibility cost is lowC. which is constant no issue exactly how much money is heldD. bereason most money is in financial institution deposits
The chance cost of holding money _______.A. is determined by the inflation rateB. is zero bereason money earns no interestC. equates to the nominal interemainder price on bondsD. equals the real interemainder price on bonds
Answer: C By holding money fairly than bonds, the holder loses thererevolve on the bonds, which is the nominal interest rate
The quantity of money demanded increases if _______.A. the supply of money increasesB. the nominal interest price fallsC. banks boost the interemainder price on depositsD. the price of a bond falls
Answer: B The nominal interest price is the possibility price of holdingmoney, so a decrease in the nominal interest price rises thequantity of money demanded.
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If the Fed rises the amount of money, civilization will be holding________.A. also much money, so they buy bonds and the interest price risesB. as well a lot money, so they buy bonds and also the interest price fallsC. the quantity of money they demand also and also financial institutions will organize more moneyD. even more money and will boost their demand for money
Answer: B People initially are holding more money than they desire, sothey buy bonds in order to hold much less money, which raises theprice of bonds and also lowers their interest price.
In the long run, money market equilibrium determines the _______.A. actual interest rateB. price levelC. nominal interest rateD. financial expansion rate
If the amount concept of money is correct and also various other points remain thesame, an increase in the amount of money rises _______.A. nominal GDP and the velocity of circulationB. the price level and also potential GDPC. real GDPD. nominal GDP and also the price level
Answer: D An boost in the quantity of money has actually no effect on realGDP or velocity, so an increase in the amount of money raisesthe price level and for this reason additionally raises nominal GDP.
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In the lengthy run via a continuous velocity of circulation, the inflation rate______.A. is continuous and also equals the money development rateB. equals the money growth price minus the expansion price of genuine GDPC. equates to the growth price of genuine GDP minus the growth rate of moneyD. is positive if the economic expansion rate is positive
Answer: B If velocity is constant, the growth price of velocity is 0 percent,so the equation of exreadjust demonstrates that answer B iscorrect.
The costs of inflation carry out not incorporate _______.A. the price of running approximately to compare prices at various outletsB. the increased chance price of holding moneyC. the taxation on money organized by individuals and also businessesD. an increase in conserving and also investment