Exam 8: Money, The Price Level, and Inflation

If V = 5,P = $3,and Y = 50,then the quantity of money equals

Which of the following functions are performed by depository institutions? I. They make long-term loans using short-term deposits,thereby creating liquidity. II. They efficiently gather funds from a large base of depositors. III. They concentrate risk.

Liquidity is the same as

The major role of a commercial bank is to

M1 includes

Matthew purchases a candy bar with his allowance.This purchase represents using money as

Which of the following explains why a bank holds reserves? I. Banks are required by law to hold reserves. II. To meet depositors' currency withdrawals. III. To use them to make loans to households.

When the nominal interest rate rises,the

In 2007,interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008,interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result,there is

The unit of account

In October of 2012,the interest rate on money market accounts was about 0.4 percent. In 2007,the interest rate on money market accounts was about 4.0 percent. What has been the impact on money demand from this fall in the interest rate?

The higher the nominal interest rate,the

Suppose that the money multiplier is 4.If the monetary base decreases by $2 million,the quantity of money will

In an economy,there is $200 million in currency held outside banks,$100 million in traveler's checks,$250 million in currency held inside the banks,$300 million in checking deposits,and $600 million in savings deposits.The value of M1 is ________.

In October of 2012,the interest rate on money market accounts was about 0.4 percent. In 2007,the interest rate on money market accounts was about 4.0 percent. What has been the impact on the demand for money curve from this fall in the interest rate?

Credit cards are

The fact that money can be exchanged for goods reflects money's role as a

"Banks make a profit by paying depositors a high rate to attract funds and making loans at a low rate to encourage borrowing." Is the previous statement correct or not?

-The above figure has the demand for money curve.Suppose the Fed initially sets the quantity of money equal to $0.6 trillion.Draw the supply of money curve in the figure.What is the equilibrium interest rate? Now suppose the Fed increases the quantity of money to $0.9 trillion.Draw the new supply curve.What is the new equilibrium interest rate?

Which of the following equations represents the equation of exchange?