31) Which of the following increases the quantity of money demanded?
A) a rise in the nominal interest rate
B) a rise in the inlation rate
C) a rise in the real interest rate
D) a fall in the nominal interest rate
E) an increase in real GDP
Skill: Level 1: Deinition
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
32) When the nominal interest rate falls, there is
A) an upward movement along the demand for money curve.
B) a downward movement along the demand for money curve.
C) a rightward shift of the demand for money curve.
D) a leftward shift of the demand for money curve.
E) no movement along the demand for money curve and the curve does not shift.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
33) An increase in the nominal interest rate leads to
A) a rightward shift in the demand for money curve.
B) a movement upward along the demand for money curve.
C) a leftward shift in the demand for money curve.
D) a movement downward along the demand for money curve.
E) neither a shift in nor a movement along the demand for money curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
11
34) The demand for money curve slopes downward because a rise in the nominal interest
rate ________ the opportunity cost of holding money and therefore ________ the quantity of
money demanded.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
35) The demand for money schedule shows the ________ relationship between money
demand and the nominal interest rate which means that as the ________.
A) negative; nominal interest rate increases, the opportunity cost of holding money
increases
B) negative; nominal interest rate increases, the opportunity cost of holding money
decreases
C) positive; nominal interest rate increases, the opportunity cost of holding money
increases
D) positive; nominal interest rate increases, the opportunity cost of holding money
decreases
E) negative; opportunity cost of holding money increases, the nominal interest rate
increases
Skill: Level 3: Using models
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
36) When the nominal interest rate increases, the
A) quantity of money demanded increases and there is a movement upward along the
demand for money curve.
B) quantity of money demanded decreases and there is a movement upward along the
demand for money curve.
C) demand for money increases and the demand for money curve shifts rightward.
D) demand for money decreases and the demand for money curve shifts leftward.
E) supply of money curve shifts rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
12
37) As the nominal interest rate increases, the opportunity cost of holding money ________
and the quantity of money demanded ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change because people need money
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
38) If the interest rate rises from 1 percent to 3 percent, the ________ decreases and the
opportunity cost of holding money ________.
A) quantity of money demanded; rises
B) quantity of money demanded; falls
C) quantity of money supplied; rises
D) quantity of money supplied; falls
E) demand for money; rises
Skill: Level 3: Using models
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
39) In 2009, the interest rate fell below 1 percent in the United States. As a result, there
was a
A) leftward shift in the supply of money curve.
B) rightward shift in the demand for money curve.
C) movement downward along the demand for money curve.
D) movement upward along the demand for money curve.
E) movement upward along the money supply curve.
Skill: Level 3: Using models
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
13
40) As the economy enters a strong expansion in which real GDP increases, which of the
following occurs?
A) The demand for money curve shifts rightward.
B) The demand for money curve shifts leftward.
C) The demand for money decreases and there is a movement upward along the demand
for money curve.
D) The demand for money increases and there is a movement downward along the demand
for money
curve.
E) The nominal interest rate falls as the demand for money curve shifts leftward.
Skill: Level 3: Using models
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
41) The quantity of money demanded is proportional to
A) the inlation rate.
B) real GDP.
C) the price level.
D) the real interest rate.
E) the nominal interest rate.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
42) The demand for money is
A) positively related to the price level.
B) positively related to the nominal interest rate.
C) negatively related to the price level.
D) negatively related to real GDP.
E) positively related to the real interest rate.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
14
43) If the price level increases, the
A) demand for money increases.
B) demand for money decreases.
C) quantity of money demanded increases.
D) quantity of money demanded decreases.
E) demand for money does not change and the quantity of money demanded does not
change.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
44) Suppose that the price level does not change while real GDP decreases. As a result,
A) the demand for money increases and the demand for money curve shifts rightward.
B) the supply of money curve shifts leftward.
C) the supply of money curve shifts rightward.
D) the quantity of money demanded decreases and there is a movement downward along
the demand for money curve.
E) the demand for money decreases so that households and irms hold smaller amounts of
money.
Skill: Level 3: Using models
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
45) When the price level increases, people demand ________ money and the demand for
money curve ________.
A) more; shifts rightward
B) more; shifts leftward
C) less; shifts rightward
D) less; shifts leftward
E) the same amount of; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
15
46) The demand for money increases and the demand for money curve shifts rightward if
A) the real interest rate increase.
B) the nominal interest rate increases.
C) the price level increases.
D) the inlation rate increases.
E) real GDP decreases.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
47) If the price level rises, there is
A) an upward movement along the demand for money curve and the curve does not shift.
B) a downward movement along the demand for money curve and the curve does not shift.
C) a rightward shift of the demand for money curve.
D) a leftward shift of the demand for money curve.
E) no movement along the demand curve for money and the curve does not shift.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
48) If the price level falls, the
A) demand for money increases.
B) demand for money decreases.
C) quantity of money demanded increases.
D) quantity of money demanded decreases.
E) demand for money does not change and the quantity of money demanded does not
change.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
16
49) The ________ the price level, the ________.
A) higher; greater the demand for money
B) higher; smaller the demand for money
C) lower; greater the demand for money
D) higher; greater the supply of money
E) higher; smaller the supply of money
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
50) An increase in the price level leads to a
A) rightward shift in the demand for money curve.
B) movement upward along the demand for money curve and no shift of the curve.
C) leftward shift in the demand for money curve.
D) movement downward along the demand for money curve and no shift of the curve.
E) rightward shift of the supply of money curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
51) An increase in the price level leads to ________ in the demand for money, and an
increase in real GDP leads to ________ in the demand for money.
A) an increase; an increase
B) an increase; a decrease
C) a decrease; an increase
D) a decrease; a decrease
E) no change; an increase
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
17
52) If real GDP decreases, the
A) demand for money increases.
B) demand for money decreases.
C) quantity of money demanded increases.
D) supply of money decreases.
E) supply of money increases.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
53) An increase in real GDP afects the demand for money because
A) when real GDP increases, more money is needed to make expenditures.
B) at the higher price level, it takes more dollars to make expenditures.
C) tax payments rise because more income is earned.
D) there is an inverse relationship between the quantity money demanded and nominal
GDP.
E) the larger real GDP, the higher the real interest rate.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
54) The ________ real GDP, the ________.
A) larger; larger the demand for money
B) larger; smaller the demand for money
C) smaller; larger the demand for money
D) larger; larger the supply of money
E) larger; smaller the supply of money
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
18
55) All else the same, when real GDP increases, the
A) demand for money decreases.
B) demand for money increases.
C) supply of money decreases.
D) supply of money increases.
E) supply of money does not change, and the demand for money does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
56) The demand for money increases and the demand curve for money shifts rightward as a
result of
A) an increase in real GDP.
B) a decrease in the real interest rate.
C) an increase in the use of credit cards.
D) a decrease in the price level.
E) a decrease in the nominal interest rate.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
57) If real GDP decreases, there is
A) an upward movement along the demand for money curve and no shift of the curve.
B) a downward movement along the demand for money curve and no shift of the curve.
C) a rightward shift of the demand for money curve.
D) a leftward shift of the demand for money curve.
E) no movement along the demand for money curve and the curve does not shift.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
19
58) When real GDP increases, the demand for money ________ and the demand for money
curve ________.
A) increases; shifts rightward
B) increases; shifts leftward
C) decreases; shifts rightward
D) decreases; shifts leftward
E) does not change; does not shift
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
59) The demand for money increases and the demand for money curve shifts rightward if
A) the real interest rate increases.
B) the nominal interest rate increases.
C) real GDP increases.
D) the inlation rate increases.
E) the price level falls.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
60) An increase in real GDP leads to
A) a rightward shift in the demand for money curve.
B) a movement upward along the demand for money curve but no shift of the curve.
C) a leftward shift in the demand for money curve.
D) a movement downward along the demand for money curve but no shift of the curve.
E) neither a shift in the demand for money curve nor a movement along the curve.
Skill: Level 2: Using deinitions
Section: Checkpoint 12.1
Status: Old
AACSB: Relective thinking
20