Exam 14: Modern Macroeconomics and Monetary Policy

The velocity of money is

Which of the following would be most likely to result in low real interest rates over a lengthy period of time?

Which of the following best describes the relationship between the velocity of money and the demand for money?

People are likely to want to hold more money if the interest rate

Figure 14-4 In Figure 14-4, an unanticipated shift to a more restrictive monetary policy will shift

If policy makers wanted to use both monetary and fiscal policy to stimulate demand and reduce a high rate of unemployment, which of the following would be most appropriate?

Since the mid-1980s, if the Fed wanted to shift to a more expansionary monetary policy, it would

In the short run, an unanticipated shift to a more restrictive monetary policy is most likely to result in

A decrease in the interest rate, other things being equal, causes

When interest rates decline to low levels following the recession of 2008-2009, individuals and businesses

Equilibrium in the loanable funds market is initially present at a stable price level (zero inflation) and a nominal (and real) interest rate of 4 percent. If a shift to expansionary monetary policy eventually leads to actual and expected inflation of 6 percent,

Use the figure below to answer the following question(s). Figure 14-5 In Figure 14-5, AD₁ and SRAS₁ indicate an economy initially operating at full-employment output level, Y₁. The short-run impact of the Fed unexpectedly shifting to a more restrictive monetary policy will be

In the short run, an unanticipated increase in the money supply will exert its primary impact on

In the short run, an unanticipated shift to a more expansionary monetary policy is most likely to result in

When the interest rate decreases, the opportunity cost of holding money

When the Fed buys bonds and injects additional reserves into the banking system, this action will

A decrease in the nominal interest rate would

Expansionary monetary policy will

Which of the following would be most indicative of a shift to a more restrictive monetary policy?

An increase in the money supply