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- The speculative demand for money suggests that:
(a) Individuals hold onto money for the purpose of engaging in transactions
(b) As the rate of interest rate increases, the demand for money will rise
(c) When the economy becomes more uncertain, people are more likely to hold unto money
(d) The velocity of money is constant
(e) As the rate of interest falls, the demand for money will rise.
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Solved in 2 steps
- According to classical economists: (a) Individuals wish to hold money only as a precaution (b) Individuals do not hold money for either precautionary or speculative reasons (c) The velocity of money is not constant but is predictable (d) The velocity of money is not constant and cannot be predicted with any degree of certainty (e) Individuals have no reason for wanting to hold moneyWhich of the following will cause the demand curve for money to shift to the right? (a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.When the demand for money is greater than the supply of money: A) people offering to sell nonmonetary financial assets must increase the interest rate these assets pay in order to sell them. B) more people will hold money. C) the opportunity cost of holding money will fall. D) interest rates will fall.
- Multiple Choice. Select the most suitable answer. The speculative demand for money suggests that: (a) Individuals hold onto money for the purpose of engaging in transactions (b) As the rate of interest rate increases, the demand for money will rise (c) When the economy becomes more uncertain, people are more likely to hold unto money (d) The velocity of money is constant (e) As the rate of interest falls, the demand for money will rise.The velocity of money represents: (a) Whether individuals are increasing or decreasing the quantity of money spent in an economy (b) The quantity of money available in an economy (c) The level of prices determined by the equation of exchange (d) How often money is used in a specific period of time (e) Whether currency is accepted as a medium of exchange in an economyIn the quantity theory of money, velocity is assumed A) to increase with increases in the money supply. B) to equal 1.4. C) constant. D) to be a declining number. Velocity is A) not constant if the demand for money depends on the interest rate. B) infinite C) zero If the demand for money depends on the quantity theory of money A) interest rate; does not hold C) level of GDP; still holds If the equation for the for money depends on nominal income but not the interest rate. D) constant and the velocity is not constant, then the B) interest rate; still holds D) level of GDP; does not hold is looked on as a demand-for-money equation, then the demanc A) unanticipated inflation rate C) Keynesian income-expenditure model Monetarists and Keynesians impact of fiscal policy on the economy. A) agree; agree C) disagree; disagree B) real business cycle theory D) quantity theory of money For price stability, monetarists argue that the money supply should grow at a rate average growth of real output.…
- The speculative demand for money a. will always increase proportionally to the precautionary demand for money b. is affected by changes in equity yields but not by interest rate changes on bank deposits c. can clearly be separated from money demand for transaction since the latter is not affected by interest rate changes d. is almost always close to zero since asset holders try to avoid holding money e. none of the aboveAccording to the quantity theory of money, (a) Increases in the money supply will lead to inflation, ceteris paribus (b) The level of inflation is independent of the money supply (c) The money supply times the velocity equals the real GDP (d) When real GDP rises, the money supply must fall by the same proportion (e) The velocity of money is assumed to fluctuate widely over timeIf banks start paying higher interest rates on checking accounts, we would expect, assuming everything else held equal, Group of answer choices a) the demand for money to become more sensitive to changes in the interest rate. this is not correct b) the demand for money to become horizontal. c) the relationship between interest rates and the demand for money to be unaffected. d) the demand for money to become less sensitive to changes in the interest rate. e) a decrease in the supply of money.
- Which one of the following statements regarding the demand for money is correct? (a) A positive relationship exists between the quantity of money demanded and the prevailing interest rate in an economy; (b) The demand for money is made up of the sum of all the money balances that participants in the economy would like to have; (c) For a given interest rate, an increase in nominal income increases the demand for money; (d) Two key factors that impact on the demand for money by individuals are savings and investments available to participants.If the money supply (M) is $300, the real GDP (Q) is 200, the velocity of money (V) is 6, the interest rates is 5% and the inflation rate is 3%, then calculate nominal GDP.In countries with extremely high inflation, increases in the money supply: A) are quickly translated into changes in the inflation rate. B) do not affect the price level. C) will decrease real GDP. D) will increase real GDP.