Exam 19: Quantity Theory, inflation and the Demand for Money

As interest rates rise,the expected absolute return of money ________,money's expected return relative to bonds ________.

Irving Fisher took the view that the institutional features of the economy which affect velocity change ________ over time so that velocity will be fairly ________ in the short run.

The theory of portfolio choice indicates that factors affecting the demand for money include

Methods of financing government spending are described by an expression called the government budget constraint,which states the following

Comparing Tobin's model of the speculative demand for money with Keynesian speculative demand

Because the quantity theory of money tells us how much money is held for a given amount of aggregate income,it is also a theory of

The theory of portfolio choice indicates that higher interest rates make money ________ desirable,and the demand for real money balances ________.

If the government finances its spending by issuing debt to the public,the monetary base will ________ and the money supply will ________.

Tobin's model of the speculative demand for money shows that people hold money as a ________ as a way of reducing ________.

The speculative demand for money may not exist because

In the Baumol-Tobin analysis of the demand for money,either an increase in ________ or an increase in ________ increases money demand.

Researchers at the Federal Reserve found that M2 money demand functions performed ________ in the 1980s,with M2 velocity moving ________ with the opportunity cost of holding M2.

If there are economies of scale in the transactions demand for money,as income increases,money demand

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.

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

Because Keynes assumed that the expected return on money was zero,he argued that people would

The portfolio theories of money demand state that when income (and therefore,wealth)is higher,the demand for the money asset will ________ and the demand for real money balances will be ________.

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

The Keynesian demand for real balances can be expressed as

Irving Fisher's view that velocity is fairly constant in the short run transforms the equation of exchange into the