Exam 16: Monetary Theory and Policy

An increase in the money supply will

If the Fed is targeting the money supply,it loses control over the interest rate.

Suppose the economy is in long-run equilibrium at the level of potential output.What will be the long-run effect of an expansionary monetary policy?

The opportunity cost of holding money is measured by the

Which of the following would cause an increase in the velocity of money?

An increase in the money supply can increase the price level,real GDP,or both,but it is impossible to tell exactly what will happen without knowing the slope of the aggregate supply curve.

Those who argue against interest rate targets for monetary policy claim that

Exhibit 15-2 -In Exhibit 15-2,short-run equilibrium occurs

Exhibit 15-3 -The economy pictured in Exhibit 15-3 is

If the Federal Reserve is targeting the money supply when the demand for money decreases,their proper response is to

If the Fed increases the money supply,GDP

Exhibit 15-3 -If the economy pictured in Exhibit 15-3 is in equilibrium where AD = SRAS,then it

For interest rates to remain stable during economic expansions,the growth rate of the money supply should

Exhibit 15-1 -In the situation shown in Exhibit 15-1,how could the Fed return the economy to potential output?

For interest rates to remain stable during economic expansions,the money supply should

When people exchange money for financial assets,the interest rate rises.

The quantity theory of money

Which of the following would cause a downward movement along the money demand curve?

In the United States over the last decade,the velocity of

Exhibit 15-1 -In the situation shown in Exhibit 15-1,how could the Fed return the economy to potential output?