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Money is extremely safe ____.
A) in real terms
B) in nominal terms
C) relative to currency
D) relative to inflation hedges
Answer: A
Diff: 1 Type: MC Page Ref: 535
Skill: Recall
Objective List: 21.3 Present empirical evidence on how the demand for money is affected by
changes in interest rates and the level of income
Inflation hedges ____.
A) have real returns that are less affected by inflation
B) increase the risk and return from holding currency
C) exhibit zero return
D) are denominated in nominal terms
Answer: A
Diff: 1 Type: MC Page Ref: 535
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Examples of inflation hedges include ____.
A) real return bonds
B) the stock market
C) bonds
D) currency
Answer: A
Diff: 1 Type: MC Page Ref: 535
Skill: Recall
Objective List: 21.2 Define the theories of the demand for money
Financial innovation will ____ and ____.
A) improve the liquidity of alternative assets; decrease the demand for money
B) improve the liquidity of alternative assets; increase the demand for money
C) reduce the relative liquidity of money; increase the demand for money
D) both A and C
Answer: A
Diff: 2 Type: MC Page Ref: 535
Skill: Recall
Objective List: 21.3 Present empirical evidence on how the demand for money is affected by
changes in interest rates and the level of income