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ECO-213 Questions And Answers Latest Updated
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ECO-213 Questions And Answers Latest Updated
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ECO-213 Questions And Answers LatestUpdated
Which of the following is NOT a goal of monetary policy? ANS✔✔ manipulating the value of the dollar
relative to other currencies to promote U.S. exports
Rising prices erode the value of money as a ________ and a ________. ANS✔✔ medium of exchange;
store of value
The money demand curve has a negative slope because ANS✔✔ lower interest rates cause households
and firms to switch from financial assets such as bonds and savings accounts to money
All else equal, money demand will increase if the price level ________ or if real GDP ________. ANS✔✔
increases;increases
An increase in real GDP ANS✔✔ increases the buying and selling of goods and increases the demand for
money as a medium of exchange
Suppose the Fed increases the money supply. Which of the following is true, all else equal? ANS✔✔ At
the original interest rate, the quantity of money demanded is less than the quantity of money supplied,
and the interest rate must fall to clear the market
When the market price of a financial asset ________ its interest rate (or current yield) will ________.
ANS✔✔ falls; rise
If the Fed FOMC buys Treasury bills through an open market purchase, then all else equal this will
ANS✔✔ shift the money supply curve to the right
2024
, All else equal, an increase in the money supply will ANS✔✔ decrease the interest rate
If money demand is extremely sensitive to changes in the interest rate (money demand is highly
"elastic"), the money demand curve becomes almost horizontal. Then, if the Fed increases the money
supply under these circumstances, the interest rate will ANS✔✔ change very little and investment and
consumer spending will change very little
All else constant, an increase in real GDP can ANS✔✔ increase money demand and increase the interest
rate
All else constant, a decrease in real GDP can ANS✔✔ decrease money demand and decrease the
interest rate
The federal funds rate is ANS✔✔ the market interest rate banks charge each other for short-term or
"overnight" loans
The federal funds rate ANS✔✔ is determined by the market forces of supply and demand of bank
reserves
The Fed can indirectly increase the federal funds rate by ANS✔✔ selling Treasury bills, which decreases
bank reserves
The Fed can indirectly decrease the federal funds rate by ANS✔✔ buying Treasury bills, which increases
bank reserves
As the Fed increases the money supply and lowers the interest rate, all else constant this will ANS✔✔
artificially increase demand for investment projects by firms in the short run
If the Fed lowers its target for the federal fund rate, this indicates that ANS✔✔ the Fed is pursuing an
expansionary monetary policy
2024
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