Question 1

As interest rates rise, the quantity of money demanded

Accepted Answer

A)  falls.
B)  rises.
C)  stays the same.
D)  does not react to interest rate changes.E) All of the above
F) A) and B)

Question 2

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

Accepted Answer

A)  interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
B)  interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
C)  interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand.
D)  interest rate to fall, causing planned real investment spending to fall and leading to an increase in aggregate demand.E) C) and D)
F) A) and B)

Question 3

The transactions demand for money

Accepted Answer

A)  varies negatively with nominal Gross Domestic Product (GDP) .
B)  varies inversely with nominal Gross Domestic Product (GDP) .
C)  varies directly with nominal Gross Domestic Product (GDP) .
D)  is unrelated to nominal Gross Domestic Product (GDP) .E) A) and C)
F) B) and C)

Question 4

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

Accepted Answer

A)  no more often than once per month.
B)  once a year.
C)  no more often than once per week.
D)  within a one-hour period during each day.E) B) and C)
F) A) and B)

Question 5

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

Accepted Answer

A)  precautionary demand for money.
B)  asset demand for money.
C)  transactions demand for money.
D)  wealth demand for money.E) A) and D)
F) A) and C)

Question 6

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

Accepted Answer

A)  an expansion of the money supply.
B)  an increase in investment.
C)  a fall in bond prices.
D)  an increase in real Gross Domestic Product (GDP) .E) B) and D)
F) All of the above

Question 7

The equation of exchange specifies that

Accepted Answer

A)  MsV = PY.
B)  velocity and money supply are directly related.
C)  MsP = VY.
D)  Ms = PVY.E) A) and B)
F) C) and D)

Question 8

Interest rates typically rise when

Accepted Answer

A)  bond prices increase.
B)  bond prices decrease.
C)  the coupon payout on existing bonds increase.
D)  the maturity date on existing bonds extends farther into the future.E) None of the above
F) B) and D)

Question 9

People hold money as an asset rather than other assets because

Accepted Answer

A)  it is highly liquid.
B)  it holds its value.
C)  it grows in value.
D)  there is no cost to holding money as an asset.E) B) and D)
F) All of the above

Question 10

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

Accepted Answer

A)  velocity has increased.
B)  velocity has decreased.
C)  interest rate has fallen.
D)  interest rate has increased.E) A) and B)
F) B) and D)

Question 11

When considering the demand for money curve, the interest rate

Accepted Answer

A)  will have a positive relationship with the quantity of money demanded.
B)  varies negatively with the transactions demand for money.
C)  is the price of holding money.
D)  is independent of the opportunity cost of money.E) B) and C)
F) A) and C)

Question 12

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Accepted Answer

A)  the transactions demand for money.
B)  the precautionary demand for money.
C)  the asset demand for money.
D)  the terminal demand for money.E) B) and C)
F) A) and D)

Question 13

The indirect effect of an increase in the money supply is to

Accepted Answer

A)  raise interest rates so people will save more.
B)  lower interest rates, which stimulates both investment and consumption spending.
C)  put more cash in people's pockets, thereby increasing aggregate demand.
D)  pay off a portion of the public debt.E) All of the above
F) B) and D)

Question 14

What does the demand curve for money look like?
 Why?

Accepted Answer

If the quantity of money is on the horiz...

Question 15

The transactions demand for money

Accepted Answer

A)  varies directly with nominal Gross Domestic Product (GDP) .
B)  varies inversely with nominal Gross Domestic Product (GDP) .
C)  varies negatively with real nominal Gross Domestic Product (GDP) .
D)  has no relationship with nominal Gross Domestic Product (GDP) .E) A) and B)
F) A) and C)

Question 16

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Accepted Answer

A)  changes in the spread between the federal funds rate and the discount rate that are consistent with rules established by the twelve Federal Reserve bank presidents.
B)  variations in reserve requirements that are consistent with the announcements by the Chair of the Fed's Board of Governors.
C)  changes in foreign exchange rates that are consistent with policies established by the Secretary of the Treasury.
D)  buying or selling government securities that are consistent with the FOMC Directive.E) None of the above
F) B) and C)

Exam 15: Domestic and International Dimensions of Monetary Policy

The indirect effect of an increase in the money supply is to

Correct Answer
verified

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

Correct Answer
verified

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

Correct Answer
verified

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Correct Answer
verified

As interest rates rise, the quantity of money demanded

Correct Answer
verified

When considering the demand for money curve, the interest rate

Correct Answer
verified

Interest rates typically rise when

Correct Answer
verified

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Correct Answer
verified

The equation of exchange specifies that

Correct Answer
verified

The transactions demand for money

Correct Answer
verified

The transactions demand for money

Correct Answer
verified

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

Correct Answer
verified

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

Correct Answer
verified

What does the demand curve for money look like? Why?

Correct Answer
verified
If the quantity of money is on the horiz...
View Answer

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

Correct Answer
verified

People hold money as an asset rather than other assets because

Correct Answer
verified

Exam 15: Domestic and International Dimensions of Monetary Policy

The indirect effect of an increase in the money supply is to

Correct AnswerverifiedShow Answer

Operations of the Trading Desk of the Federal Reserve Bank of New York are typically conducted

Correct AnswerverifiedShow Answer

According to the interest-rate-based transmission mechanism for monetary policy, an increase in the money supply will cause the

Correct AnswerverifiedShow Answer

It is the responsibility of the Trading Desk at the Federal Reserve Bank of New York to implement policies in the form of

Correct AnswerverifiedShow Answer

As interest rates rise, the quantity of money demanded

Correct AnswerverifiedShow Answer

When considering the demand for money curve, the interest rate

Correct AnswerverifiedShow Answer

Interest rates typically rise when

Correct AnswerverifiedShow Answer

The demand for money to cover unexpected expenditures and to meet emergencies is known as

Correct AnswerverifiedShow Answer

The equation of exchange specifies that

Correct AnswerverifiedShow Answer

The transactions demand for money

Correct AnswerverifiedShow Answer

The transactions demand for money

Correct AnswerverifiedShow Answer

If both nominal and real GDP are increasing when the money supply is constant, than we can conclude that

Correct AnswerverifiedShow Answer

If the Fed purchases U.S. government securities in the open market, all of the following would occur EXCEPT

Correct AnswerverifiedShow Answer

What does the demand curve for money look like? Why?

Correct AnswerverifiedIf the quantity of money is on the horiz...View AnswerShow Answer

Travis always carries $100 in his wallet to pay for groceries. This is an example of the

Correct AnswerverifiedShow Answer

People hold money as an asset rather than other assets because

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If the quantity of money is on the horiz...
View Answer

Correct Answer
verified

Correct Answer
verified