If the demand for money exceeds the available supply, it can be expected that: O the money supply curve will shift to the right. O interest rates will fall O the demand for money curve will shift to the left. O interest rates will rise.
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- If interest rates decrease: O the quantity of money demanded will not change. O the money demand curve will shift to the right. the quantity of money demanded will decrease. O the money demand curve will shit to the left. the quantity of money demanded will increase.The Central Bank prints withdraws money from circulation and burns it. This will cause interest rates to: (Hint: draw a graph for the money market to figure out your answer.) O Stay the same Decrease IncreaseIn 2019, The Fed was liquidating their balance sheet (meaning they were selling off the bonds and securities purchased in The Great Recession 2007-2009). That means they are trying to do what in regards to the supply of money. O Increase O Decrease O Create a money stream to increase supply of money O Increase their Capital Gains
- The table below describes two different demands for money and the supply of money. Answer the following questions based on this table. Instructions: Enter your answers as a whole number. Total Demand for Money Price of Money Money Supply Demand 1 Demand 2 Total Money Demand 1 $400 $300 $150 $ 2 400 250 150 3 400 200 150 400 150 150 5 400 100 150 a. What is the price of money? O Consumer Price Index O Interest rate O Inflation rate O Production rate b. What type of demand for money does Demand 1 represent? O Unit-of-account demand O Asset demand O Total demand O Transaction demand c. What type of demand for money does Demand 2 represent? O Total demand O Unit-of-account demand O Transaction demand O Asset demand d. Complete the "Total Money Demand" column in the above table.The economy grows (GDP increases) but the central bank moves to keep interest rates constant. Select one: O a. money demand decreases, money supply is unchanged and interest rates decrease O b. money demand increases, money supply is unchanged and interest rates increase 1O c. money demand decreases, money supply increases and interest rates remain unchanged O d. money demand increases, money supply decreases and interest rates remain unchanged money demand increases, money supply is unchanged and interest rates is unchanged O e.If inflation occurs when the money supply expands, what happens when the money supply contracts? (Think about this one) Prices will adjust to compensate for the altered size of the money supply. The price of everything is dramatically reduced to the point of nearly being 0. O Nothing happens. O Prices also rise.
- An increase in the interest rate decreases the opportunity cost of holding money. O True FalseWhen the interest rate falls , other things remaining the same, what change occurs in the market for money? The opportunity cost of holding money _______ and _______. A. rises ; the demand for money decreases B. rises ; the quantity of money demanded decreases C. falls ; the quantity of money demanded increases D. falls ; the demand for money increasesExhibit 15.3 Sm S'm Dm M. Quantity of money M' Exhibit 15.3 shows equilibrium in a money market. What happens if the money supply curve shifts from S to S'm while the rate of interest remains at i? O a. There will be an excess supply of money. O b. The quantity of money demanded will fall. Oc. The quantity of money supplied will fall. Od. The Fed will buy U.S. Treasury securities. O e. There will be an excess demand for money. Interest rate
- Which of the following will not lead to an increase the money supply? O Increase the discount rate O Open market sale Decrease the required reserve ratio. O Inject new money into the economy.Which of the following would lead to a decrease in the equilibrium interest rate? O a. Decrease the money demand O b. Decrease the money supply Ос. Increase in money demand O d. Increase the money supply O e. Directly lower the interest rate and change neither the money demand nor the money supplyWhen the money market is drawn with the value of money on the vertical axis, a decrease in the money supply leads people to O spend more so the value of a dollar falls. spend less so the value of a dollar falls. O spend more so the value of a dollar rises. spend less so the value of a dollar rises. W