An increase in in the name of GDP rises the need for money becausea) interest prices will rise.b) much more money is necessary to finance a bigger volume that transactions.c) bond prices will certainly fall.d) the opportunity expense of stop money will certainly decline.

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Which that the complying with is correct?a) The asset demand for money is downsloping because the opportunity expense of holding money declines as the interest rate rises.b) The asset need for money is downsloping because the opportunity cost of holding money rises as the interest price rises.c) The transactions need for money is downsloping because the opportunity expense of holding money different inversely v the attention rate.d) The asset need for money is downsloping since bond prices and also the interest price are straight related.
b) The asset demand for money is downsloping due to the fact that the opportunity price of holding money rises as the interest rate rises.
If the demand for money and also the it is provided of money both decrease, the equilibriuma) interest rate will decline, however we cannot predict the readjust in the equilibrium quantity of money.b) amount of money and the equilibrium interest price will both increase.c) quantity of money will increase, but we cannot predict the adjust in the equilibrium attention rate.d) amount of money will decline, yet we cannot predict the adjust in the equilibrium interest rate.
d) quantity of money will decline, however we cannot predict the adjust in the equilibrium attention rate.
Answer the inquiry on the communication of the complying with information for a bond having no expiration date: link price = $1,000; bond fixed yearly interest payment = $100; bond yearly interest price = 10 percent. If the price of this bond falls by $200, the interest rate willa) increase by 2.5 portion points.b) increase by 5 percent points.c) fall by 2.5 percentage points.d) autumn by 5 percentage points.
The commonwealth Reserve financial institutions buy government securities from commercial banks. Together a result, the can be harvested depositsa) the commercial banks are unchanged, yet their to make reservation increase.b) and reserves that commercial banks both decrease.c) the commercial financial institutions are unchanged, but their to make reservation decrease.d) and also reserves that commercial financial institutions are both unchanged.
Assume the reserve ratio is 25 percent and Federal Reserve financial institutions buy $4 million of U.S. Securities from the public, which deposits this amount right into checking accounts. As a an outcome of these transactions, the supply of money isa) not directly affected, yet the money-creating potential the the advertising banking device is increased by $12 million.b) directly increased by $4 million and the money-creating potential that the commercial banking device is increased by an additional $16 million.c) directly lessened by $4 million and also the money-creating potential of the advertising banking mechanism is decreased by second $12 million.d) straight increased by $4 million and also the money-creating potential of the advertisement banking mechanism is increased by second $12 million.
d) directly increased through $4 million and also the money-creating potential of the advertising banking device is increased by secondary $12 million.
Assume the a single commercial bank has no excess reserves and that the reserve ratio is 20 percent. If this bank sells a bond because that $1,000 to a commonwealth Reserve Bank, the can expand its loan by a maximum ofa) $1,000.b) $2,000.c) $800.d) $5,000.
When the required reserve proportion is decreased, the overabundance reserves the member financial institutions area) reduced, however the multiple by which the commercial banking system have the right to lend is unaffected.b) reduced and the multiple through which the commercial bank system have the right to lend is increased.c) increased and also the multiple through which the commercial banking system can lend is increased.d) increased and the multiple by which the commercial bank system can lend is reduced.
Suppose that, for every 1-percentage-point decline in the discount rate, commercial financial institutions collectively borrow secondary $2 exchange rate from commonwealth Reserve Banks. Likewise assume the the reserve proportion is 10 percent. If the Fed lowers the discount rate from 4.0 percent come 3.5 percent, bank reserves willa) increase by $1 billion and the money supply will rise by $5 billion.b) decline by $1 billion and the money supply will decrease by $10 billion.c) boost by $1 billion and also the money supply will boost by $10 billion.d) boost by $10 billion and also the money it is provided will rise by $100 billion.
Interest payment on overabundance reserves held at the Fed a) is available to the general public, yet not come commercial banks.b) incentivizes financial organizations to hold much more reserves and reduce risky lending.c) is established by the federal funds rate.d) totaled over $1 sunshine in 2012.
Which that the adhering to statements is true?a) The federal Reserve sets the federal funds rate.b) The federal Reserve set the target because that the federal funds rate, and also then supplies the reserve ratio to push banks toward the target.c) The commonwealth Reserve does not set the commonwealth funds rate, yet historically has influenced it with the use of the open-market operations.d) The commonwealth Reserve will set a higher target because that the federal funds rate if follow an expansionary financial policy.
c) The commonwealth Reserve go not collection the federal funds rate, yet historically has actually influenced it v the use of the open-market operations.
Q12. I beg your pardon of the following best describes the cause-effect chain of an expansionary monetary policy?a) A decrease in the money it is provided will lower the attention rate, rise investment spending, and also increase accumulation demand and GDP.b) A to decrease in the money supply will raise the interest rate, decrease invest spending, and decrease aggregate demand and also GDP.c) an increase in the money supply will raise the attention rate, decrease invest spending, and decrease aggregate demand and also GDP.d) rise in the money supply will reduced the interest rate, increase investment spending, and increase aggregate demand and also GDP.
d) rise in the money it is provided will lower the interest rate, increase investment spending, and also increase aggregate demand and also GDP.
If the federal Reserve authorities to be attempting to mitigate demand-pull inflation, the appropriate policies would certainly be toa) sell federal government securities, advanced reserve requirements, raise the discount rate, and also increase the interest paid top top reserves held at the Fed banks.b) buy government securities, raise reserve requirements, raise the discount rate, and also reduce the quantity of interest paid ~ above reserves organized at the Fed banks.c) sell government securities, reduced reserve requirements, reduced the discount rate, and increase the interest paid on reserves hosted at the Fed banks.d) sell federal government securities, raise reserve requirements, reduced the discount rate, and also increase the attention paid top top reserves hosted at the Fed banks.
a) sell government securities, advanced reserve requirements, advanced the discount rate, and also increase the interest paid on reserves hosted at the Fed banks.

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Assuming federal government wishes to either rise or diminish the level of aggregate demand, i beg your pardon of the adhering to pairs room not continual policy measures?a) a tax rise and boost in the money supplyb) a tax reduction and rise in the money supplyc) a palliation in government expenditures and also a decline in the money supplyd) a tax rise and an increase in the interest rate
The purpose of a restrictive financial policy is toa) minimize recessions.b) raise interest rates and also restrict the access of bank credit.c) increase aggregate demand and also GDP.d) boost investment spending.
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