Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter D, Problem 3QP
(a)
To determine
The effects of shortage in the market.
(b)
To determine
Describe the surplus in money market.
(c)
To determine
Describe the equilibrium in the money market.
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Students have asked these similar questions
Part (i) of the figure shows the money market and the effect of a decrease in the supply of money. The corresponding sequence of events in the bond market is as follows: The ________ of money at i0 leads firms and households to ________ bonds, which leads to a(n) ________ in the price of bonds and an increase in the interest rate.
A. excess supply; buy; decrease
B. excess demand;sell;decrease
C. excess supply;buy;increase
D. excess demand; sell; increase
Which of the following statements is false
A. Money is not a comsumption or a capital good
B. An increase in the money supply does not confer a general benefit on society
C. Economic theory cannot tell us generally which groups benefit and which groups are injured by inflation
D. Economic theory cannot tell us the supply of money that is proper for an economy to have
The Federal Reserve's Federal Open Market
Committee engages in open market
operations, which is
Select one:
a.
attempting to alter the interest rate when
banks borrow and lend from each other.
b.
changing the interest rate that banks pay
when they borrow from the Fed.
C.
the buying and selling of government bonds
to affect the money supply.
d.
adjusting the interest rate that the Fed pays
on excess reserves.
Chapter D Solutions
Macroeconomics
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- Assume the supply of money is fixed by the authorities. Show how the money market equilibrium interest rate rises when income increasesarrow_forwardthe government of a country increases the growth rate of the money supply from 5 percent per year to 50 percent per year. what happened to prices?arrow_forwardWhich of the following reduces the interest rate? a. a decrease in government expenditures and a decrease in the money supply b. an increase in government expenditures and an increase in the money supply c. an increase in government expenditures and a decrease in the money supply d. a decrease in government expenditures and an increase in the money supplyarrow_forward
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