Exam 17: Monetary Theory and Policy

The relationship between the interest rate and the quantity of money demanded

Exhibit 16-3 -In the situation shown in Exhibit 16-3, how could the Fed return the economy to potential output?

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?

Which of the following is an example of a contractionary monetary policy?

As the interest rate increases,

The opportunity cost of holding money

If the Fed buys bonds, then the money supply

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

In recent years, much of the emphasis of Fed policy has been on

In the aggregate demand-aggregate supply model, an increase in the money supply will cause in the short run a(n)

If the Fed decreases the money supply, GDP

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

Exhibit 16-2 -Each of the following can cause the supply of money to shift from S to S* in Exhibit 16-2, except

Which of the following, other things constant, will shift the money demand curve to the right?

If the Fed increases the money supply, then

The opportunity cost of holding money increases when

Which of the following is an example of an expansionary monetary policy?

In a macroeconomic model, increases in the money supply decrease the interest rate, increase investment, and thus raise employment and real GDP.

If investment is not sensitive to changes in the interest rate, then changes in the money supply

An increase in the money supply leads to a(n)