Exam 16: Monetary Theory and Policy

The demand for money is depicted by a curve downward sloping curve because if the interest rate falls,the opportunity cost of holding assets in the form of money decreases.

Which of the following statements about the velocity of money in the U.S.is correct?

If the demand for money increases,

In the history of monetary policy,the period of October 1979 to October 1982 was notable for

The quantity theory of money states that increases in the money supply result in proportional increases in real GDP.

If the money supply increases,the interest rate will __________ and people will want to hold a __________ quantity of money.

According to the equation of exchange,if the amount of money in the economy of Monetania times the velocity of money equals 800 million Monetanian dollars ($),then Monetania's

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand,

If the Fed expands the money supply,a short-run aggregate supply curve __________ would yield the largest short-run increase in the price level.

What is the opportunity cost of holding money rather than some other financial asset?

If the Fed wanted to stimulate the economy,it might

The velocity of M1 money has moved erratically in the past several years because

The opportunity cost of holding money

If the money supply equals $1,000 and nominal GDP equals $3,000,then V

If the quantity of money supplied exceeds the quantity of money demanded,

In the quantity theory of money,it is assumed that M and P are the only elements in the equation that are free to fluctuate.

The money demand curve slopes

Which of the following is the last step in the sequence?

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

If the Fed decreases the money supply,GDP