When the interest rate falls: people desire higher money balances as the opportunity cost of holding...
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Homework Answers
When the interest rate in the market falls, people will save less and opportunity cost of saving the money falls in the market, It will decease the savings are increase the consumption. The answer is "A".
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When the interest rate falls:
people desire higher money balances as the opportunity cost of
holding...
true or false: the higher the short-term interest rate, the lower the opportunity costs holding money
true or false: the higher the short-term interest rate, the lower the opportunity costs holding money
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises...
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises with the interest rate. O Downward sloping because the opportunity cost of holding money is inversely related to the interest rate. Downward sloping because the opportunity cost of holding money rises as the interest rate falls. O Downward sloping because the opportunity cost of holding money rises as the interest rate rises.
Use the graph to illustrate the effects of inflation on the money market. The interest rate...
Use the graph to illustrate the effects of inflation on the money market. The interest rate is the opportunity cost of holding money. What happens to the opportunity cost of holding money 10 Money supply when inflation occurs? 8 The opportunity cost of holding money decreases. 7 The opportunity cost of holding money increases 6 The opportunity cost of holding money is constant 5 The opportunity cost of holding money increases 4 but then decreases. Money demand 2 1 250...
5. The motives for holding money Aa Aa Match the correct motive for holding money to...
5. The motives for holding money Aa Aa Match the correct motive for holding money to the following definitions. Motive Definition The stock of money people hold to pay everyday predictable expenses Transactions demand for money The stock of money people hold to take advantage of future changes in Speculative demand for money the price of non-money financial assets The stock of money people hold to pay unpredictable expenses Precautionary demand for moey Identify the motive for holding money in...
1. If people expect higher inflation in the near future, the expected return on bonds rises/falls), and the deman...
1. If people expect higher inflation in the near future, the expected return on bonds rises/falls), and the demand for money (increases/decreases), leading to the rate of interest increasing/decreasing). 2. For the following questions, fill in the blanks below with: rises/falls/right/left/increase/decrease a. When real income increases, the demand curve for money shifts to the the interest rate _, everything else held constant. and b. A business cycle expansion increases income, causing money demand to interest rates to , everything else...
At higher interest rates,____ of holding money is high -transaction costs -opportunity costs -benefits
At higher interest rates,____ of holding money is high -transaction costs -opportunity costs -benefits
What is the opportunity cost of holding money? QUESTION 6 According to the quantity theory of...
What is the opportunity cost of holding money?
QUESTION 6 According to the quantity theory of money, if the growth rate of money supply increases by 2 percentage points inflation increases by 2 percentage points and real interest rates increase by 2 percentage points inflation increases by 2 percentage points and nominal interest rates increase by 2 percentage points inflation increases by 1 percentage points and nominal interest rates increase by 1 percentage points inflation increases by 1 percentage points...
Which of the following explains why the demand for money curve has an inverse relationship between...
Which of the following explains why the demand for money curve has an inverse relationship between the interest rates and the quantity of money demanded? a. As the interest rate falls, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments. b. As the interest rate rises, the demand for money curve shifts outward to the right. c. As the interest rate rises, people find it advantageous to borrow...
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and serv
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and services demanded.b. A higher price level leads to higher money demand, higher money demand leads to lower interest rates, and a lower interest rate reduces the quantity of goods and services demanded.c. A lower price level leads to lower money demand, lower...
1.) Using the above figure, if the price level increases the equilibrum interest rate rises and...
1.)
Using the above figure, if the price level increases
the equilibrum interest rate rises and the equilibrium quantity
of money rises
the equilibrium interest rate rises and the equilibrium quantity
of money falls
the equilibrium interest rate rises and the equilibrium quantity
of money stays the same
the equilibrium interest rate falls and the equilibrium quantity
of money falls
the equilibrium interest rate falls and the equilibrium quantity
of money stays the same
2.)
The demand for money is...
The money demand curve is: O Upward sloping because the opportunity cost of holding money rises with the interest rate. O Downward sloping because the opportunity cost of holding money is inversely related to the interest rate. Downward sloping because the opportunity cost of holding money rises as the interest rate falls. O Downward sloping because the opportunity cost of holding money rises as the interest rate rises.
Use the graph to illustrate the effects of inflation on the money market. The interest rate is the opportunity cost of holding money. What happens to the opportunity cost of holding money 10 Money supply when inflation occurs? 8 The opportunity cost of holding money decreases. 7 The opportunity cost of holding money increases 6 The opportunity cost of holding money is constant 5 The opportunity cost of holding money increases 4 but then decreases. Money demand 2 1 250...
5. The motives for holding money Aa Aa Match the correct motive for holding money to the following definitions. Motive Definition The stock of money people hold to pay everyday predictable expenses Transactions demand for money The stock of money people hold to take advantage of future changes in Speculative demand for money the price of non-money financial assets The stock of money people hold to pay unpredictable expenses Precautionary demand for moey Identify the motive for holding money in...
1. If people expect higher inflation in the near future, the expected return on bonds rises/falls), and the demand for money (increases/decreases), leading to the rate of interest increasing/decreasing). 2. For the following questions, fill in the blanks below with: rises/falls/right/left/increase/decrease a. When real income increases, the demand curve for money shifts to the the interest rate _, everything else held constant. and b. A business cycle expansion increases income, causing money demand to interest rates to , everything else...
What is the opportunity cost of holding money?
QUESTION 6 According to the quantity theory of money, if the growth rate of money supply increases by 2 percentage points inflation increases by 2 percentage points and real interest rates increase by 2 percentage points inflation increases by 2 percentage points and nominal interest rates increase by 2 percentage points inflation increases by 1 percentage points and nominal interest rates increase by 1 percentage points inflation increases by 1 percentage points...
1.)
Using the above figure, if the price level increases
the equilibrum interest rate rises and the equilibrium quantity
of money rises
the equilibrium interest rate rises and the equilibrium quantity
of money falls
the equilibrium interest rate rises and the equilibrium quantity
of money stays the same
the equilibrium interest rate falls and the equilibrium quantity
of money falls
the equilibrium interest rate falls and the equilibrium quantity
of money stays the same
2.)
The demand for money is...
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