Homework Answers
In the liquidity-preference model, the slope of the money supply curve is vertical, reflecting the assumption that the Bank of Canada completely controls the supply of money.
This assumption is not very accurate because interest on money is ignored.
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In the liquidity-preference model, the slope of the money supply curve is: horizontal, reflecting the assumption...
7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates...
7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will nominal interest rates in the long run. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8. If neither investment nor consumption depends on the interest rate, then the IS curve is , and_ policy has no effect on output. A) vertical; monetary B) horizontal; monetary...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
In the Liquidity Preference model, the endogeneous variable is -supply of money -price level -income -interest...
In the Liquidity Preference model, the endogeneous variable is -supply of money -price level -income -interest rate
Which of the following will increase the money demand curve in the Liquidity Preference model? decrease...
Which of the following will increase the money demand curve in the Liquidity Preference model? decrease in the money supply decrease in expected inflation increase in national income (GDP) a and b above none of the above The majority of economists in the U.S. support which of the following? dropping most if not all trade barriers greater immigration to the U.S. reducing or eliminating most agricultural subsidies all of the above none of the above Which function of money is...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest rates rise as the Bank the qua b. because interest rates fall as the Bank of Canada reduces the supp c. because people will want to hold less money as the cost of doing so d. because people will want to hold more money as the cost of doing rest rates fall as the ofCanada reduces the quantity of money demanded anada reduces the...
decided with an adel 14. The endogenous variable in the liquidity preference model is a money...
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....
Question 8 The theory of liquidity preference implies that an increase in the price level shifts...
Question 8 The theory of liquidity preference implies that an increase in the price level shifts the Not yet answered Marked out of 2.00 Flag question Select one: a money demand curve to the right, so the interest rate decreases. b. money demand curve to the left, so the interest rate decreases. 0 C. money demand curve to the right, so the interest rate increases. 0 d. money demand curve to the left, so the interest rate increases. Question 9...
Question 1 The theory of liquidity preference implies that the equilibrium in the money market is...
Question 1 The theory of liquidity preference implies that the equilibrium in the money market is achieved by adjustments in Not yet answered Select one: Marked out of 2.00 a. the interest rate. P Flag question b. the aggregate demand. c. the menu cost. O d. real wealth. Question 2 Assume that the multiplier is 6. If there is no crowding-out effect, then a $60 billion increase in government expenditures causes aggregate demand to Not yet answered Marked out of...
Generally, when economists talk of the interest rate what are they talking about? For the CPI,...
Generally, when economists talk of the interest rate what are
they talking about?
For the CPI, what is the base year? a. It is the year the CPI first appeared. O b. It is the benchmark against which other years are compared, and it changes each year. O c. It is the year prior to the year for which the CPI is calculated. O d. It is the benchmark against which other years are compared, and it changes occasionally. Price...
Why does the short-run aggregate supply curve slope upward? O A. Profits rise when the prices...
Why does the short-run aggregate supply curve slope upward? O A. Profits rise when the prices of the goods and services firms sell rise more rapidly than the prices they pay for inputs. O B. An increase in market prices results in an increase in quantities supplied, as stated by the law of supply. O C. As the number of workers, machinery, and equipment increase, and technological changes occurs, quantity supplied increases. O D. All of the above cause the...
7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will nominal interest rates in the long run. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8. If neither investment nor consumption depends on the interest rate, then the IS curve is , and_ policy has no effect on output. A) vertical; monetary B) horizontal; monetary...
Money Demand According to Liquidity Preference Theery, why is the Money Demand curve downwaed sloping? a because interest rates rise as the Bank of Canada reduces the quantity of money demanded b. because interest rates fall as the Bank of Canada reduces the Money Supply c because people will want to hold less money as the cost of doing so fals d. because people will want to hold more money as the cost of doing so falls Money Demand and...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest rates rise as the Bank the qua b. because interest rates fall as the Bank of Canada reduces the supp c. because people will want to hold less money as the cost of doing so d. because people will want to hold more money as the cost of doing rest rates fall as the ofCanada reduces the quantity of money demanded anada reduces the...
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....
Question 8 The theory of liquidity preference implies that an increase in the price level shifts the Not yet answered Marked out of 2.00 Flag question Select one: a money demand curve to the right, so the interest rate decreases. b. money demand curve to the left, so the interest rate decreases. 0 C. money demand curve to the right, so the interest rate increases. 0 d. money demand curve to the left, so the interest rate increases. Question 9...
Question 1 The theory of liquidity preference implies that the equilibrium in the money market is achieved by adjustments in Not yet answered Select one: Marked out of 2.00 a. the interest rate. P Flag question b. the aggregate demand. c. the menu cost. O d. real wealth. Question 2 Assume that the multiplier is 6. If there is no crowding-out effect, then a $60 billion increase in government expenditures causes aggregate demand to Not yet answered Marked out of...
Generally, when economists talk of the interest rate what are
they talking about?
For the CPI, what is the base year? a. It is the year the CPI first appeared. O b. It is the benchmark against which other years are compared, and it changes each year. O c. It is the year prior to the year for which the CPI is calculated. O d. It is the benchmark against which other years are compared, and it changes occasionally. Price...
Why does the short-run aggregate supply curve slope upward? O A. Profits rise when the prices of the goods and services firms sell rise more rapidly than the prices they pay for inputs. O B. An increase in market prices results in an increase in quantities supplied, as stated by the law of supply. O C. As the number of workers, machinery, and equipment increase, and technological changes occurs, quantity supplied increases. O D. All of the above cause the...
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