Macro Economics Chapter 16 Quiz Flashcards
The precautionary demand for money: A: varies inversely with the price level.B: is a classical concept in monetary theory. C: is used as an insurance agent against unexpected needs.D: varies inversely with the income level.E: states that nominal income must exceed real income.
C
Other things being equal, an increase in the rate of interest causes a (an): A: upward movement along the demand for money curve.B: leftward shift of the demand for money curve. C: downward movement along the demand for money curve.D: rightward shift of the demand for money curve.
A
If people attempt to sell bonds because of excess money demand, then the interest rate will: A: rise. B: react unpredictably. C: remain unchangedD: fall.
A
Using the aggregate supply and demand model, assume the economy is operating along the intermediate portion of the aggregate supply curve. An increase in the money supply will increase the price level and: A: raise the interest rate and lower real GDP. B: lower the interest rate and raise GDP. C: raise both the interest rate and real GDP. D: lower both the interest rate and real GDP.
B
If there is a recession, the Fed would most likely: A: restrict bank lending by lowering the federal funds rate.B: encourage banks to provide loans by lowering the discount rate. C: restrict bank lending by raising the discount rate. D: restrict bank lending by lowering the discount rate.E: encourage banks to provide loans by raising the discount rate.
B
Keynesians believe that an increase in the money supply will lead to: A: an decrease in nominal GDP. B: an increase in the price level. C: an increase in real GDP. D: both c and d. E: all of the following.
C
According to Keynesians, an increase in the money supply will have its greatest impact on GDP when the aggregate demand curve intersects: A: the horizontal portion of the aggregate supply curve.B: either the upward sloping or the vertical portions of the aggregate supply curve. C: the vertical portion of the aggregate supply curve. D: either the horizontal or vertical portions of the aggregate supply curve. E: the upward sloping portion of the aggregate supply curve.
A
If M stands for the money supply, V for the velocity of money, P for the average selling price, and Q for the output of goods and services, the equation of exchange is: A: MV = PQ. B: MP = VQ. C: MQ = VP. D: MP = PQ.
A
The belief that the velocity of money is not constant but highly predictable is associated with the: A: monetarist school B: Keynesian school. C: supply-side school. D: rational expectations school E: classical school.
A
