Exam 21: Quantity Theory, inflation, and the Demand for Money

If people expect nominal interest rates to be lower in the future,the expected return on bonds ________,and the demand for money ________.

The equation of exchange states that the quantity of money multiplied by the number of times this money is spent in a given year must equal ________.

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

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

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

The equation of exchange is ________.

Financial innovation will ________ and ________.

Currency and chequable deposits are said to be ________.

Describe what the liquidity trap is.Explain how it can be problematic for monetary policymakers.

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

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

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

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

The Tobin mean-variance analysis of money demand is an application of ________.

Give the equation of exchange and explain the variables used in it.Why we call it an identity?

The view that velocity is constant in the short run transforms the equation of exchange into the quantity theory of money.According to the quantity theory of money,when the money supply doubles ________.

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.

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

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 ________.

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