Question

decided with an adel 14. The endogenous variable in the liquidity preference model is a money supply bmoney demand. price level d. velocity of money. • e interest rate.. 15. In developing countries, financial markets are not developed as the developed countries. Honce most businesses depend on funding from banks. So developing countries depend mostly on .a. indirect finance. b direct finance. c. non-intermediary finance d. government finance. Figure 3-2 QoFM 16. The graph above shows the liquidity preference model. The change in the interest rate from ito I could be caused by a. a decrease in consumer income - demand b. the introduction of Apple/Google pay which allows transactions without money.- dumand t. a decrease in expected intiation. d. an increase in the liquidity of other financial assets-domand e 17. Suppose a country is expecting social unrest and increase in crime, the ATM model of money proposes that there will be, ceteris paribus a. an increase in demand for money. b. an increase in supply of money. c. an increase in interest rate. d. a decrease in supply of money a decrease in demand for money. 18. Quantity demanded of money is a unlimited. b. inversely related to money supply. inversely related to interest rate d. directly related to interest rate. e directly related to money supply.

Answer 1

As per HOMEWORKLIB RULES questions on the first page are answered below

Kindly ask rest of the questions in a separate post

14.

Interest rate

Reason: In the liquidity preference model, the variable interest rate is calculated within the model, making them endogenous

15.

Direct finance

Reason: Developing countries look for direct financing for their investment projects

16.

A decrease in expected inflation

Reason: A decrease in expected inflation will lead to consumers increasing their spending power and thus demand for money. This shifts the money demand curve to the right, leading to an increase in interest rate

17.

A decrease in demand for money

Reason: As per the ATM model, an increase in crime rates and social unrest will make people visit less often to ATMs to take out money, leading to a fall in demand for money

18.

Inversely related to interest rate

Reason: Interest rates act as opportunity cost of borrowing money. As a result, as interest rates increase, opportunity cost of borrowing money increases, leading to a fall in money demand