the economics of money, banking, and financial markets

135 #

© 2014 Pearson Canada Inc.#

6. 
   

   A rise in the price level causes the demand for money to ____ and the interest rate to
   ____, everything else held constant.
   A) decrease; decrease
   B) decrease; increase
   C) increase; decrease
   D) increase; increase
   Answer: D
   Diff: 1 Type: MC Page Ref: 101
   Skill: Applied
   Objective List: 5.5 Examine supply and demand for money using the liquidity preference
   framework

   
   


7. 
   

   A decline in the expected inflation rate causes the demand for money to ____ and the
   demand curve to shift to the ____, everything else held constant.
   A) decrease; right
   B) decrease; left
   C) increase; right
   D) increase; left
   Answer: B
   Diff: 1 Type: MC Page Ref: 101
   Skill: Applied
   Objective List: 5.5 Examine supply and demand for money using the liquidity preference
   framework

   
   


8. 
   

   ____ in the money supply creates excess ____ money, causing interest rates to
   ____, everything else held constant.
   A) A decrease; demand for; rise
   B) An increase; demand for; fall
   C) An increase; supply of; rise
   D) A decrease; supply of; fall
   Answer: A
   Diff: 1 Type: MC Page Ref: 101
   Skill: Applied
   Objective List: 5.5 Examine supply and demand for money using the liquidity preference
   framework