1. The classicists argue that money supply affects
The price level
2. In the classical model, the aggregate supply curve is vertical line because it assumed that
Output is unrelated to price level
3. The origins of modern monetarism lie in the work of the
Keynesians
4. Economist who said that “inflation is always and everywhere a monetary phenomenon”.
Milton Friedman
5. The speculative demand for money emphasizes the function of money as
A store of value
6. According to Keynes, the key difference between money and bonds is that
money is less risky
7. For a given demand for money, a decrease in the money supply will
a. Reduce the level of interest rate c. lower the price of bonds
b. Raise investment spending d. all of the above
8. The equilibrium level of income occurs in the Keynesian model
At full employment
9. A balance of payments _____ is associated with a _____ of international reserves.
deficit; loss
10. A commercial bank with total liabilities of P100 million and demand deposits of P80 million
must, in order to meet a 10% reserve requirement, hold reserves of at least.
