Exam 22: Quantity Theory, Inflation, and the Demand for Money

The Baumol-Tobin analysis suggests that an increase in the brokerage fee for buying and selling bonds will cause the demand for money to ________ and the demand for bonds to ________.

The evidence on the interest sensitivity of the demand for money suggests that the demand for money is ________ to interest rates, and there is ________ evidence that a liquidity trap exists.

This method of financing government spending is frequently called printing money because high-powered money (the monetary base) is created in the process.

The quantity theory of inflation indicates that the inflation rate equals

The velocity of money is defined as

Keynes argued that when interest rates were low relative to some normal value, people would expect bond prices to ________ so the quantity of money demanded would ________.

Fisher's quantity theory of money suggests that the demand for money is purely a function of ________, and ________ no effect on the demand for money.

The demand for money as a cushion against unexpected contingencies is called the

Tobin's model of the speculative demand for money improves on Keynes's analysis by showing that

Keynes hypothesized that the precautionary component of money demand was primarily determined by the level of

Velocity is defined as

Tobin's model of the speculative demand for money shows that people can reduce their ________ by ________ their asset holdings.