Question 1

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

Accepted Answer

A) precautionary demand for money. 
B) asset demand for money. 
C) transactions demand for money. 
D) wealth demand for money. 
A) precautionary demand for money. 
B) asset demand for money. 
C) transactions demand for money. 
D) wealth demand for money.

Question 2

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

Accepted Answer

A) velocity has increased. 
B) velocity has decreased. 
C) interest rate has fallen. 
D) interest rate has increased. 
A) velocity has increased. 
B) velocity has decreased. 
C) interest rate has fallen. 
D) interest rate has increased.

Question 3

The indirect effect of an increase in the money supply is to

Accepted Answer

A) raise interest rates so people will save more. 
B) lower interest rates, which stimulates both investment and consumption spending. 
C) put more cash in people's pockets, thereby increasing aggregate demand. 
D) pay off a portion of the public debt. 
A) raise interest rates so people will save more. 
B) lower interest rates, which stimulates both investment and consumption spending. 
C) put more cash in people's pockets, thereby increasing aggregate demand. 
D) pay off a portion of the public debt.

Question 4

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Accepted Answer

A) the transactions demand for money. 
B) the precautionary demand for money. 
C) the asset demand for money. 
D) the terminal demand for money. 
A) the transactions demand for money. 
B) the precautionary demand for money. 
C) the asset demand for money. 
D) the terminal demand for money.

Question 5

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

Accepted Answer

A) no more often than once per month. 
B) once a year. 
C) no more often than once per week. 
D) within a one-hour period during each day. 
A) no more often than once per month. 
B) once a year. 
C) no more often than once per week. 
D) within a one-hour period during each day.

Question 6

When considering the demand for money curve, the interest rate

Accepted Answer

A) will have a positive relationship with the quantity of money demanded. 
B) varies negatively with the transactions demand for money. 
C) is the price of holding money. 
D) is independent of the opportunity cost of money. 
A) will have a positive relationship with the quantity of money demanded. 
B) varies negatively with the transactions demand for money. 
C) is the price of holding money. 
D) is independent of the opportunity cost of money.

Question 7

The transactions demand for money

Accepted Answer

A) varies negatively with nominal Gross Domestic Product (GDP). 
B) varies inversely with nominal Gross Domestic Product (GDP). 
C) varies directly with nominal Gross Domestic Product (GDP). 
D) is unrelated to nominal Gross Domestic Product (GDP). 
A) varies negatively with nominal Gross Domestic Product (GDP). 
B) varies inversely with nominal Gross Domestic Product (GDP). 
C) varies directly with nominal Gross Domestic Product (GDP). 
D) is unrelated to nominal Gross Domestic Product (GDP).

Question 8

What does the demand curve for money look like?
 Why?

Accepted Answer

If the quantity of money is on the horiz

Question 9

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Accepted Answer

A) changes in the spread between the federal funds rate and the discount rate that are consistent with rules established by the twelve Federal Reserve bank presidents. 
B) variations in reserve requirements that are consistent with the announcements by the Chair of the Fed's Board of Governors. 
C) changes in foreign exchange rates that are consistent with policies established by the Secretary of the Treasury. 
D) buying or selling government securities that are consistent with the FOMC Directive. 
A) changes in the spread between the federal funds rate and the discount rate that are consistent with rules established by the twelve Federal Reserve bank presidents. 
B) variations in reserve requirements that are consistent with the announcements by the Chair of the Fed's Board of Governors. 
C) changes in foreign exchange rates that are consistent with policies established by the Secretary of the Treasury. 
D) buying or selling government securities that are consistent with the FOMC Directive.

Question 10

Interest rates typically rise when

Accepted Answer

A) bond prices increase. 
B) bond prices decrease. 
C) the coupon payout on existing bonds increase. 
D) the maturity date on existing bonds extends farther into the future. 
A) bond prices increase. 
B) bond prices decrease. 
C) the coupon payout on existing bonds increase. 
D) the maturity date on existing bonds extends farther into the future.

Question 11

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

Accepted Answer

A) an expansion of the money supply. 
B) an increase in investment. 
C) a fall in bond prices. 
D) an increase in real Gross Domestic Product (GDP). 
A) an expansion of the money supply. 
B) an increase in investment. 
C) a fall in bond prices. 
D) an increase in real Gross Domestic Product (GDP).

Question 12

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

Accepted Answer

A) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand. 
B) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand. 
C) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand. 
D) interest rate to fall, causing planned real investment spending to fall and leading to an increase in aggregate demand. 
A) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand. 
B) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand. 
C) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand. 
D) interest rate to fall, causing planned real investment spending to fall and leading to an increase in aggregate demand.

Question 13

As interest rates rise, the quantity of money demanded

Accepted Answer

A) falls. 
B) rises. 
C) stays the same. 
D) does not react to interest rate changes. 
A) falls. 
B) rises. 
C) stays the same. 
D) does not react to interest rate changes.

Question 14

People hold money as an asset rather than other assets because

Accepted Answer

A) it is highly liquid. 
B) it holds its value. 
C) it grows in value. 
D) there is no cost to holding money as an asset. 
A) it is highly liquid. 
B) it holds its value. 
C) it grows in value. 
D) there is no cost to holding money as an asset.

Question 15

The transactions demand for money

Accepted Answer

A) varies directly with nominal Gross Domestic Product (GDP). 
B) varies inversely with nominal Gross Domestic Product (GDP). 
C) varies negatively with real nominal Gross Domestic Product (GDP). 
D) has no relationship with nominal Gross Domestic Product (GDP). 
A) varies directly with nominal Gross Domestic Product (GDP). 
B) varies inversely with nominal Gross Domestic Product (GDP). 
C) varies negatively with real nominal Gross Domestic Product (GDP). 
D) has no relationship with nominal Gross Domestic Product (GDP).

Question 16

The equation of exchange specifies that

Accepted Answer

A) MsV = PY. 
B) velocity and money supply are directly related. 
C) MsP = VY. 
D) Ms = PVY. 
A) MsV = PY. 
B) velocity and money supply are directly related. 
C) MsP = VY. 
D) Ms = PVY.

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

The indirect effect of an increase in the money supply is to

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

When considering the demand for money curve, the interest rate

The transactions demand for money

What does the demand curve for money look like? Why?

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Interest rates typically rise when

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

As interest rates rise, the quantity of money demanded

People hold money as an asset rather than other assets because

The transactions demand for money

The equation of exchange specifies that

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 15: Domestic and International Dimensions of Monetary Policy

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

The indirect effect of an increase in the money supply is to

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

When considering the demand for money curve, the interest rate

The transactions demand for money

What does the demand curve for money look like? Why?

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Interest rates typically rise when

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

As interest rates rise, the quantity of money demanded

People hold money as an asset rather than other assets because

The transactions demand for money

The equation of exchange specifies that

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters