Exam 16: Monetary Theory and Policy

Exhibit 15-4 -In Exhibit 15-4,short-run equilibrium occurs

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

If real output and velocity are stable and predictable,then the equation of exchange can be used to derive a simple relationship between

If the Fed increases the money supply,then

According to the equation of exchange,if nominal GDP equals $6 trillion and the money supply equals $1 trillion,the velocity of money

If the price level rises,the money demand curve will shift to the right.

The quantity theory of money

A movement upward and to the left along the money demand curve is caused by

If the Fed targets the interest rate,then

Nonbank financial institutions,like,insurance companies and money market mutual funds make up what is known as the shadow banking system.

Exhibit 15-6 -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 is measured by the

Exhibit 15-3 -In the situation shown in Exhibit 15-3,how could the Fed return the economy to potential output?

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

If the Fed wanted to stimulate the economy,it might

The opportunity cost of holding money increases when

In deciding how much money to hold,you should compare the

In the United States over the last decade,the velocity of

Exhibit 15-8 -In Exhibit 15-8,the demand for money is represented by D₁ and the supply by S₁.If the Fed buys bonds on the open market,the equilibrium will move from

A rising rate of inflation