In the United States, which event would have caused the shift of the money supply curve from S1 to S2 in the money
market shown above?
(A)The purchase of government bonds on the open market by the Federal Reserve
(B)An increase in the required reserve ratio
(C)A short-run increase in output, employment, and income
(D)An increase in general price level in the United States
(E)An increase in the supply of dollars in foreign exchange markets
The money demand curve is downward sloping because
(A)the transaction demand for money decreases as interest rates fall
(B)people hold less money as the opportunity cost of holding money rises
(C)money is less liquid as interest rates rise, so people are able to hold less of it
(D)banks are more willing to create money when interest rates fall
(E)with higher incomes, people are willing to hold smaller percentages of their money
An increase in which of the following will cause an increase in the demand for money?
(A)The interest rate
(B)The supply of money
(C)The price level
(D)The velocity of money
(E)The trade deficit
An increase in the price level will most likely cause which of the following?
(A)A leftward shift of the aggregate demand curve
(B)An increase in the demand for money
(C)An increase in the real interest rate
(D)A decrease in the nominal interest rate
(E)An increase in the supply of money
Which of the following is true of the opportunity cost of holding cash?
(A)It is zero.
(B)It is represented by the value of the dollar.
(C)It is equal to the price level.
(D)It decreases as the price level rises.
(E)It increases as the interest rate rises.
The money demanded for the purpose of purchasing goods and services is known as
(A)an asset demand
(B)a derived demand
(C)excess reserves
(D)a transactions demand
(E)balance of payments
The transaction demand for money is very closely associated with money’s use as a
(A)store of value
(B)standard unit of account
(C)measure of value
(D)medium of exchange
(E)standard of deferred payment
The amount of money that the public wants to hold in the form of cash will
(A)be unaffected by any change in interest rates or the price level
(B)increase if interest rates increase
(C)decrease if interest rates increase
(D)increase if the price level decreases
(E)decrease if the price level remains constant
An increase in government spending will affect the demand for money and nominal interest rates in which of the
following ways?
(A)Demand for Money = Increase ; Nominal Interest Rates = Increase
(B)Demand for Money = Increase ; Nominal Interest Rates = Decrease
(C)Demand for Money = Increase ; Nominal Interest Rates = Indeterminate
(D)Demand for Money = Decrease ; Nominal Interest Rates = Increase
(E)Demand for Money = Decrease ; Nominal Interest Rates = Decrease