Exhibit 20-2 Money market demand and supply curves As shown in Exhibit 20-2, assume the money supply curve shifts rightward from MS1 to MS2 and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

A) higher interest rate and no effect on real GDP or the price level. B) lower investment, lower real GDP, and lower price level. C) higher investment, higher real GDP, and higher price level. D) higher investment, lower real GDP, and lower price level. A) higher interest rate and no effect on real GDP or the price level. B) lower investment, lower real GDP, and lower price level. C) higher investment, higher real GDP, and higher price level. D) higher investment, lower real GDP, and lower price level.

Exam 20: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Exhibit 20-2 Money market demand and supply curves As shown in Exhibit 20-2, assume the money supply curve shifts rightward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

(Multiple Choice)

4.8/5

(36)

Question 81

Which of the following correctly gives us the equation of exchange?

(Multiple Choice)

4.8/5

(38)

Question 82

The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.

(True/False)

4.8/5

(34)

Question 83

Assume the economy is experiencing a recessionary gap. Keynesian economists would support which of the following policies:

(Multiple Choice)

4.8/5

(47)

Question 84

The Keynesian mechanism through which monetary policy affects the price level, real GDP, and employment depends on the impact of the:

(Multiple Choice)

4.9/5

(30)

Question 85

The belief that the velocity of money is not constant but highly predictable is associated with the:

(Multiple Choice)

4.8/5

(40)

Question 86

Discuss the determinants of the equilibrium interest rate and how it may change. What can the Fed do to change the interest rate?

(Essay)

4.9/5

(43)

Question 87

When the Fed decreases the money supply, interest rates:

(Multiple Choice)

4.7/5

(36)

Question 88

The demand for money that households keep for emergency purposes is known as the:

(Multiple Choice)

4.9/5

(35)

Question 89

Assume the economy is operating at a real GDP above full-employment real GDP. Classical economists would prescribe which of the following policies?

(Multiple Choice)

4.8/5

(29)

Question 90

One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses. This motive for holding money is called:

(Multiple Choice)

4.8/5

(35)

Question 91

Exhibit 20A-3 Macro AD/AS Model As shown in Exhibit 20A-3, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment.

(Multiple Choice)

4.8/5

(38)

Question 92

The assumption that the velocity of money and the quantity being produced is constant is held by the:

(Multiple Choice)

4.8/5

(28)

Question 93

Exhibit 20-4 Aggregate demand and supply model In Exhibit 20-4, which one of the following actions could the Fed use to shift the AD curve from AD₃ to AD₂?

(Multiple Choice)

4.9/5

(31)

Question 94

Monetarists believe that an increase in the money supply will lead to:

(Multiple Choice)

4.8/5

(39)

Question 95

If the velocity of the M1 money supply is 4 and nominal GDP is $200 billion, the stock of money in circulation must be:

(Multiple Choice)

4.8/5

(33)

Question 96

The opportunity cost of holding money is measured by the rate of interest.

(True/False)

4.7/5

(42)

Question 97

People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:

(Multiple Choice)

4.7/5

(45)

Question 98

Which of the following is the velocity of money?

(Multiple Choice)

5.0/5

(36)

Question 99

The quantity of money held in response to interest rates is the:

(Multiple Choice)

4.7/5

(30)

Question 100

Showing 81 - 100 of 246

Exam 20: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Exhibit 20-2 Money market demand and supply curves As shown in Exhibit 20-2, assume the money supply curve shifts rightward from MS1 to MS2 and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

Which of the following correctly gives us the equation of exchange?

The opportunity cost of holding money is properly measured by the rate of interest on financial assets such as bonds.

Assume the economy is experiencing a recessionary gap. Keynesian economists would support which of the following policies:

The Keynesian mechanism through which monetary policy affects the price level, real GDP, and employment depends on the impact of the:

The belief that the velocity of money is not constant but highly predictable is associated with the:

Discuss the determinants of the equilibrium interest rate and how it may change. What can the Fed do to change the interest rate?

When the Fed decreases the money supply, interest rates:

The demand for money that households keep for emergency purposes is known as the:

Assume the economy is operating at a real GDP above full-employment real GDP. Classical economists would prescribe which of the following policies?

One reason that people hold money is to pay for unexpected car repairs and other unpredictable expenses. This motive for holding money is called:

Exhibit 20A-3 Macro AD/AS Model As shown in Exhibit 20A-3, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E1 to full employment.

The assumption that the velocity of money and the quantity being produced is constant is held by the:

Exhibit 20-4 Aggregate demand and supply model In Exhibit 20-4, which one of the following actions could the Fed use to shift the AD curve from AD3 to AD2?

Monetarists believe that an increase in the money supply will lead to:

If the velocity of the M1 money supply is 4 and nominal GDP is $200 billion, the stock of money in circulation must be:

The opportunity cost of holding money is measured by the rate of interest.

People learn to hold a specific quantity of money for the groceries, theater tickets, gasoline, clothes, film, and other items they habitually purchase. This behavior is representative of the:

Which of the following is the velocity of money?

The quantity of money held in response to interest rates is the:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Exhibit 20-2 Money market demand and supply curves As shown in Exhibit 20-2, assume the money supply curve shifts rightward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

Exhibit 20A-3 Macro AD/AS Model As shown in Exhibit 20A-3, assume the marginal propensity to consume MPC equals 0.75. Using discretionary fiscal policy, federal government spending should be ____ in order to restore the economy from E₁ to full employment.

Exhibit 20-4 Aggregate demand and supply model In Exhibit 20-4, which one of the following actions could the Fed use to shift the AD curve from AD₃ to AD₂?