Chapter_15_Practice_Problems - Chapter 15 1 An increase in the interest rate A decreases the opportunity cost of holding money B increases the

Chapter_15_Practice_Problems - Chapter 15 1 An increase in...

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Chapter 15 1) An increase in the interest rate A) decreases the opportunity cost of holding money.B) increases the opportunity cost of holding money.C) decreases the percentage yield of holding money.D) increases the percentage yield of holding money. 2) An increase in the price level causes A) the money demand curve to shift to the left.B) the money demand curve to shift to the right.C) a movement up along the money demand curve.D) a movement down along the money demand curve. 3) Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to A) increase.B) decrease.C) not change.D) increase if the economy is in a recession. Figure 15-2 4) Refer to Figure 15-2. In the figure above, the movement from point Ato point Bin the money market would be caused by A) an increase in the price level.B) a decrease in real GDP.C) an open market sale of Treasury securities by the Federal Reserve.D) a decrease in the required reserve ratio by the Federal Reserve.
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