Exam 16: Monetary Theory and Policy

The demand for money is based primarily on money's role as a(n)

For the quantity theory of money to yield useful predictions,

Which monetary policy would be appropriate to close a contractionary gap?

If the Fed wants to close a contractionary gap,it might

If something causes the velocity of money to increase,the same amount of money will

Because monetary policy is the main focus of the Fed,it ignores international considerations.

What is the effect of an expansionary monetary policy on the demand for investment curve?

Velocity will be higher

In the long run,an increase in aggregate demand

If the money supply is $600,the price level is $2,and real GDP is $300,what is velocity?

The steeper the short-run aggregate supply curve,the __________ the change in price level and the __________ the change in real Gross Domestic Product for a given shift in the aggregate demand curve.

An increase in aggregate demand will have the greatest short-run effect on real output if the

The demand curve for investment is graphed with __________ on the vertical axis and __________ on the horizontal axis.

When calculating by how much changes in the money supply will change nominal GDP,we use the money multiplier instead of the spending multiplier.

In the long run,increases in the money supply increase the economy's potential output level.

What happens to the aggregate demand curve when the Fed reduces the money supply?

If the Fed sells government securities to banks,eventually we expect

If interest rates are __________ to changes in the money supply and planned investment expenditures are __________ to interest rate changes,then monetary policy will be effective in changing aggregate demand.

If the Federal Reserve is targeting the interest rate when the demand for money increases,their proper response is to

The opportunity cost of holding money increases when