During a period of rapid inflation the central bank increases the reserve requirement. Select one: O a. money supply decrease, money demand decrease, interest rate increase O b. money supply increase, money demand increase, interest rate decrease O. money supply increase, money demand unchanged, interest rate decrease O d. money supply decrease, money demand unchanged, interest rate increase O e. money supply unchanged, money demand decrease and interest rate decrease

During a period of rapid inflation the central bank increases the reserve requirement. Select one: O a. money supply decrease, money demand decrease, interest rate increase O b. money supply increase, money demand increase, interest rate decrease O. money supply increase, money demand unchanged, interest rate decrease O d. money supply decrease, money demand unchanged, interest rate increase O e. money supply unchanged, money demand decrease and interest rate decrease

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 4TY

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The economy recently experienced an increase in the number of tourist arrivals, increasing income throughout the island. Select one: O a. money supply increase, money demand increase, interest rate decrease O b. money supply unchanged, money demand increase, interest rate increase Oc. money supply unchanged, money demand decrease and interest rate decrease O d. money supply increase, money demand unchanged, interest rate decrease O e. money supply decrease, money demand unchanged, interest rate increase
The economy grows (GDP increases) but the central bank moves to keep interest rates constant. Select one: O a. money demand decreases, money supply is unchanged and interest rates decrease O b. money demand increases, money supply is unchanged and interest rates increase 1O c. money demand decreases, money supply increases and interest rates remain unchanged O d. money demand increases, money supply decreases and interest rates remain unchanged money demand increases, money supply is unchanged and interest rates is unchanged O e.
Which set of actions could the central bank use to increase the money supply? Select one: O a. an open market purchase and a tax cut O b. a discount rate cut and an open market sale O c.a reduction in the required reserve ratio and an open market purchase O d. a reduction in the required reserve ratio and an open market sale
The central bank sold existing government securities in an open market operation. Which of the following changes is the most likely result of this action? Select one: a. The reserve requirement decreases. O b. The nominal interest rate increases. O c. The discount rate increases O d. Bank reserves increase.
Trevor goes to the ATM machine and withdraws $500 in cash. How will this affect the monetary base? Select one: O a. The monetary base will decline as bank reserves fall. O b. The monetary base will increase with the increase in currency in circulation. O c. The monetary base will increase by less than the size of the withdrawal as the increase in the currency in circulation will not be completely offset by a decrease in bank reserves. O d. The monetary base will remain unchanged with the increase in the currency in circulation being exactly offset by a decrease in bank reserves.
The United States Federal Reserve is currently the money supply with the intention of keeping short-term interest rates O A. increasing, high B. increasing, low O C. decreasing, low O D. decreasing, high Reset Selection
Fiat money has Select one: a. value, because it can be redeemed for gold by the central bank. O b. little to no intrinsic value but is backed by the quantity of gold held by the central bank. C. a great intrinsic value that is independent of its use as money. O d. little to no intrinsic value and is authorized by the central bank or governmental body. Clear my choice Fini
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Which of the following statements about money that is correct? O A. Credit cards and debit cards are examples of money. B. Deposits are money because they can be used to make payments. O C. Inflation brings a rising value of money. O D. Money is a completely stable store of value.
The demand for money arises out of the need to hold money as a medium of exchange. This demand for money is a function of O A. transactions; interest rates O B. transactions; national income O C. precautionary; interest rates OD. speculative; interest rates
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in the money supply in the market for money creates excess interest rates to , money, causing everything else held constant. O A decrease; supply of; fall O An increase; demand for; fall O A decrease; demand for; rise O An increase; supply of; rise