the economics of money, banking, and financial markets

886 #

© 2014 Pearson Canada Inc.#

11. 
    

    In the Keynesian model the quantity of money demanded is ____ related to income and
    ____ related to the interest rate.
    A) positively; positively
    B) positively; negatively
    C) negatively; negatively
    D) negatively; positively
    Answer: B
    Diff: 2 Type: MC Page Ref: 2
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model

    
    


12. 
    

    According to the liquidity preference theory, the demand for money is ____ related to
    aggregate output and ____ related to interest rates.
    A) negatively; negatively
    B) negatively; positively
    C) positively; negatively
    D) positively; positively
    Answer: C
    Diff: 2 Type: MC Page Ref: 2
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model

    
    


13. 
    

    As interest rates rise, the opportunity cost of holding money ____ and the demand for
    money ____.
    A) rises; rises
    B) rises; falls
    C) falls; rises
    D) falls; falls
    Answer: B
    Diff: 2 Type: MC Page Ref: 2
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model

    
    


14. 
    

    As aggregate output rises, the demand for money ____ and the interest rate ____,
    so that money demanded equals money supplied and the money market is in equilibrium.
    A) increases; rises
    B) increases; falls
    C) decreases; rises
    D) decreases; falls
    Answer: A
    Diff: 2 Type: MC Page Ref: 2
    Skill: Recall
    Objective List: WEB CHAPTER: The ISLM Model