978-1259723223 Test Bank TBChap036 Part 7

purposes is $800 billion, it can generally be concluded that

269.

A decrease in the interest rate will cause a(n)

270.

Which of the following varies directly with the interest rate?

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market for money.

Test Bank: II

Topic: Interest Rates

271.

A wealthy executive is holding money, waiting for a good time to invest in the stock

market. This action would be an example of the

272.

There is an asset demand for money primarily because of which function of money?

273.

An increase in nominal GDP will

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AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Understand

D i f f i c u l t y : 02 Medium

Learning Objective: 36–01 Discuss how the equilibrium interest rate is determined in the

market for money.

Test Bank: II

Topic: Interest Rates

274.

Which line in the graph would best illustrate the transactions demand for money curve?

275.

Which line in the graph would best illustrate the asset demand for money curve?

276.

Which line in the graph would best illustrate the supply of money curve?

277.

Refer to the graph, in which Dt is the transactions demand for money, Dm is the total

demand for money, and Sm is the supply of money. If the

interest rate was 4 percent, the

asset demand for money would be

278.

Refer to the graph, in which Dt is the transactions demand for money, Dm is the total

demand for money, and Sm is the supply of money. The market

is initially in equilibrium at

a 6 percent interest rate. If the money supply increases, then Sm2 will shift to

279.

Refer to the graph, in which Dt is the transactions demand for money, Dm is the total

demand for money, and Sm is the supply of money. The market

is in equilibrium at the 6

percent rate of interest. If the money supply then decreases as shown, the transaction demand

for money will change by

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280.

Refer to the graph, in which Dt is the transactions demand for money, Dm is the total

demand for money, and Sm is the supply of money. The market

is initially in equilibrium at

a 6 percent rate of interest. If the supply of money increases as shown, then the asset demand

for money will increase

by

281.

Interest

Rate

Asset Demand for Money (Billions)

7%

$200

6

300

5

400

4

500

Suppose that the transactions demand for money is equal to 20 percent of the nominal GDP,

the supply of money is $800 billion, and the asset

demand for money is that shown in the

table. If the nominal GDP is $2,000 billion, the equilibrium interest rate is

282.

Interest

Rate

Asset Demand for Money (Billions)

7%

$200

6

300

5

400

4

500

Refer to the table. Suppose that the transactions demand for money is $300 billion and the

money supply is $700 billion. A decrease in the money

supply to $600 billion would cause

the interest rate to

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B.

rise to 6 percent.

C.

fall to 4 percent.

D.

fall to 5 percent.

283.

Refer to the graph, which shows the supply and demand for money, where Dm1, Dm2, and

Dm3 represent different demands for money and Sm1, Sm2,

and Sm3 represent different

levels of the money supply. The initial equilibrium point is A. What will be the new

equilibrium point following an

autonomous increase in the asset demand for money?

36-132

written consent of McGraw-Hill Education.

AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Understand

D i f f i c u l t y : 02 Medium

Learning Objective: 36–01 Discuss how the equilibrium interest rate is determined in the

market for money.

Test Bank: II

Topic: Interest Rates

Type: Graph

284.

Refer to the graph, which shows the supply and demand for money, where Dm1, Dm2, and

Dm3 represent different demands for money and Sm1, Sm2,

and Sm3 represent different

levels of the money supply. The initial equilibrium point is A. What will be the new

equilibrium point following a

decrease in the transactions demand for money?

36-133

written consent of McGraw-Hill Education.

D i f f i c u l t y : 02 Medium

Learning Objective: 36–01 Discuss how the equilibrium interest rate is determined in the

market for money.

Test Bank: II

Topic: Interest Rates

Type: Graph

285.

Refer to the graph, which shows the supply and demand for money, where Dm1, Dm2, and

Dm3 represent different demands for money and Sm1, Sm2,

and Sm3 represent different

levels of the money supply. The initial equilibrium point is A. What will be the new

equilibrium point following a

decrease in the money supply?

36-134

written consent of McGraw-Hill Education.

Topic: Interest Rates

Type: Graph

286.

When the interest rate falls, the

287.

In which case would the quantity of money demanded by the public tend to increase by

the greatest amount?

288.

Refer to the graph. If the supply of money was $200 billion, the interest rate would be

289.

Refer to the graph. If the equilibrium interest rate is 4 percent, the supply of money must be

290.

Refer to the graph. If the interest rate rises from 2 percent to 3 percent, the supply of money

must have

291.

Refer to the graph. If the initial equilibrium interest rate was 5 percent and the money supply

increased by $100 billion, then the new interest rate

would be

292.

The interest rate will fall when the

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written consent of McGraw-Hill Education.

D.

supply of money decreases.

293.

Assume that the stock of money is determined by the Federal Reserve and does not

change when the interest rate changes. This situation means that

the

294.

An increase in the money supply is likely to reduce

295.

Disequilibrium in the money market is mainly corrected via a change in

297.

If bond prices decrease, then the