the economics of money, banking, and financial markets

653 $

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13. 
    

    If people expect nominal interest rates to be lower in the future, the expected return on bonds
    ____, and the demand for money ____.
    A) increases; increases
    B) increases; decreases
    C) decreases; increases
    D) decreases; decreases
    Answer: B
    Diff: 2 Type: MC Page Ref: 534 - 535
    Skill: Recall
    Objective List: 21.2 Define the theories of the demand for money

    
    


14. 
    

    Keynes argued that when interest rates were low relative to some normal value, people
    would expect bond prices to ____ so the quantity of money demanded would ____.
    A) increase; increase
    B) increase; decrease
    C) decrease; increase
    D) decrease; decrease
    Answer: C
    Diff: 2 Type: MC Page Ref: 534 - 535
    Skill: Recall
    Objective List: 21.2 Define the theories of the demand for money

    
    


15. 
    

    Keynes argued that when interest rates were high relative to some normal value, people
    would expect bond prices to ____ , so the quantity of money demanded would ____.
    A) increase; increase
    B) increase; decrease
    C) decrease; decrease
    D) decrease; increase
    Answer: B
    Diff: 2 Type: MC Page Ref: 535
    Skill: Recall
    Objective List: 21.2 Define the theories of the demand for money

    
    


16. 
    

    According to Keynes's theory of liquidity preference, velocity increases when ____.
    A) income increases
    B) wealth increases
    C) brokerage commissions increase
    D) interest rates increase
    Answer: D
    Diff: 2 Type: MC Page Ref: 534 - 535
    Skill: Recall
    Objective List: 21.2 Define the theories of the demand for money