Exam 19: 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 ________.

Starting in 1974,the conventional M1 money demand function began to

In the Baumol-Tobin model,given that total costs for an individual equals ,where T0 = monthly income,b = brokerage costs,and C = amount raised from each bond transaction,derive the so-called square root rule.

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

If nominal GDP is $10 trillion,and velocity is 10,the money supply is

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

If the money supply is $20 trillion and velocity is 2,then nominal GDP is

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

The Keynesian theory of money demand emphasizes the importance of

If the money supply is $500 and nominal income is $3,000,the velocity of money is

The finance of government spending through a Treasury sale of bonds which are then purchased by the Fed

The absence of money illusion means that

In one of the earliest studies on the link between interest rates and money demand using United States data,James Tobin concluded that the demand for money is

In a liquidity trap,monetary policy has ________ effect on aggregate spending because a change in the money supply has ________ effect on interest rates.

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

If the deficit is financed by selling bonds to the ________,the money supply will ________,increasing aggregate demand,and leading to a rise in the price level.

If the money supply is $2 trillion and velocity is 5,then nominal GDP is

Keynes's model of the demand for money suggests that velocity is

If initially the money supply is $1 trillion,velocity is 5,the price level is 1,and real GDP is $5 trillion,an increase in the money supply to $2 trillion

The velocity of money is defined as