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

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

In the liquidity trap,the money demand curve

________ quantity theory of money suggests that the demand for money is purely a function of income,and interest rates have no effect on the demand for money.

In the late 1990s,M2 velocity ________,suggesting a ________ normal relationship between M2 and macroeconomic variables.

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

If the money supply is $600 and nominal income is $3,000,the velocity of money is

Keynes's theory of the demand for money is consistent with ________ movements in ________.

Because Keynes assumed that the expected return on money was zero,he argued that people 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 quantity theory of inflation indicates that the inflation rate equals

The Keynesian theory of money demand predicts that people will increase their money holdings if they believe that

Keynes's theory of the demand for money is consistent with

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

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

If the deficit is financed by selling bonds to the ________,the money supply will ________,causing aggregate demand to ________.

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

In the equation of exchange,the concept that provides the link between M and PY is called

Evidence suggests that a liquidity trap is possible when

Only when budget deficits are financed by money creation does the increased government spending lead to ________ in the ________.

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