Exam 21: The Influences of Monetary and Fiscal Policy on Aggregate Demand: How Monetary Policy Influences Aggregate Demand

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

According to the theory of liquidity preference,money demand

When households decide to hold more money,

The interest-rate effect

According to liquidity preference theory,the slope of the money demand curve is explained as follows:

Which of the following shifts aggregate demand to the right?

People will want to hold less money if the price level

When the interest rate decreases,the opportunity cost of holding money

Which of the following is likely more important for explaining the slope of the aggregate-demand curve of a small economy than it is for the United States?

While a television news reporter might state that "Today the Fed raised the federal funds rate from 1 percent to 1.25 percent," a more precise account of the Fed's action would be as follows:

According to liquidity preference theory,the money-supply curve would shift rightward

In response to the sharp decline in stock prices in October 1987,the Federal Reserve

According to the theory of liquidity preference,a decrease in the price level causes the

Liquidity refers to

Using the liquidity-preference model,when the Federal Reserve increases the money supply,

Liquidity preference refers directly to Keynes' theory concerning

Which of the following events would shift money demand to the right?

Which of the following statements is correct for the long run?

Which of the following properly describes the interest-rate effect?

Which of the following is correct?