Exam 19: The Demand for Money

The more sensitive is the demand for money to interest rates,the ________ unpredictable velocity will be,and the link between the money supply and aggregate spending will be ________ clear.

Friedman's argument that competition among banks will tend to keep the difference between the return on bonds and money relatively constant implies that changes in ________ will have ________ on the demand for money.

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

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

The speculative motive for holding money is closely tied to what function of money?

The Baumol-Tobin analysis suggests that a decrease in the brokerage fee for buying and selling bonds will cause the demand for money to ________ and the demand for bonds to ________.

The Baumol-Tobin analysis suggests that

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

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

In the 20th century,velocity has

The quantity theory of money is a theory of how

In the early 1990s,M2 growth underwent a dramatic ________,which some researchers believe ________ be explained by traditional money demand functions.

In a liquidity trap,monetary policy has ________ effect on aggregate spending because a change in the money supply has ________ effect on interest rates.

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

________ 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.

If the money supply is $2 trillion and velocity is 5,then nominal GDP is

Evidence since 1915 indicates that velocity has

Until the Great Depression,economists did not recognize that velocity

Researchers at the Federal Reserve found that M2 money demand functions performed ________ in the 1980s,with M2 velocity moving ________ with the opportunity cost of holding M2.

Because Keynes assumed that the expected return on money was zero,he argued that people would