EBK ESSENTIALS OF ECONOMICS
EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 22, Problem 5QCMC
To determine

Money growth, quantity theory of money, and Fisher effect.

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What is the demand for​ money?   When the nominal interest rate​ rises, does the opportunity cost of holding money increase or​ decrease? Does the quantity of money demanded increase or​ decrease? The demand for money is the relationship between the quantity of money demanded and the​ _______ when all other influences on the amount of money that people wish to hold remain the same.     A. price of bonds   B. real interest rate   C. inflation rate   D. nominal interest rate   When the nominal interest rate​ rises, the opportunity cost of holding money​ _______ and the quantity of money demanded​ _______.     A. ​falls; increases   B. ​rises; decreases   C. ​falls; decreases   D. ​rises; increases
Milton Friedman argued that the Fed's control over the money supply could be used to peg   a. the level of a nominal or real variable, but not the growth rate of a real or nominal variable.   b. the level or growth rate of a real variable, but not the level or growth rate of a nominal variable.   c. the level or growth rate of a nominal variable, but not the level or growth rate of a real variable.   d. both levels and growth rates of both real and nominal variables.
An increase in ________ decreases the quantity of money people want to hold. a. the price level b. real GDP c. the interest rate d. the quantity of money
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