Exam 8: Money, the Price Level, and Inflation

Which of the following applies to money when it serves as a store of value? I.Money is a store of value because it is an agreed measure for stating goods' prices. II.The more stable money's value, the better it serves as a store of value. III.When money serves as a store of value, it requires a double coincidence of wants.

The money aggregate M1 consists of

When the quantity of money demanded is greater than the quantity of money supplied, people ________ bonds and the interest rate ________.

Which of the following is NOT considered a function of money?

The discount rate is the interest rate

The largest component of M2 is

The demand for money curve shifts rightward if

A change in the price level changes the amount of nominal money people demand.

When the nominal interest rate rises, the opportunity cost of holding money

Suppose you hold $50 to buy groceries weekly and then the price of groceries increases by 5 percent. To be able to buy the same amount of groceries, what must happen to your nominal money holdings?

Which of the following is NOT an asset of the Federal Reserve System?

The demand for money curve shifts rightward if

Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 20 percent. How many deposits can Bank A create?

In the short run, how is the interest rate determined? If the interest rate is less than the equilibrium interest rate, what occurs?

When the Fed sells government securities to a bank, how are the Fed's assets affected?

The opportunity cost of holding money is the

A bank has no excess reserves. Then it receives a new deposit for $100,000. If it has a desired reserve ratio of 20 percent, by how much can it increase its loans?

Traveler's checks are included in M1 but not in M2.