666 - 1.Individuals base their demand for an asset on All of the above 2.Which one of the following statements is the most accurate A rise in the

666 - 1.Individuals base their demand for an asset on All...

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1.Individuals base their demand for an asset on 2.Which one of the following statements is the most accurate? 3.The aggregate money demand depends on 4.The aggregate real money demand schedule L(R,Y) slopes downward because a fall in the interest rate raises the desired real money holdings of each household and firm in the economy. 5.A rise in real GNP raises aggregate real money demand for a given interest rate, moving the L(R,Y) schedule to the right. 6.The money supply schedule is vertical because M is set by the central bank while P is taken as given. 7.If there is initially excess supply of money , the interest rate falls, and if there is initially an excess demand , it rises. 8.Which one of the following statements is the most accurate? An increase in the money supply lowers the interest rate, while a fall in the money supply raises the interest rate, given the price level and output. 9.An increase in real output raises the interest rate, while a fall in real output lowers the interest rate, given the price level and the money supply. 10.An increase in a country’s money supply causes its currency to depreciate in the foreign exchange market, while a reduction in the money supply causes its currency to appreciate. 11.Given P US and Y US, an increase in the European money supply causes the euro to depreciate against the dollar, but it does not disturb the U.S. money market equilibrium. 12.An economy’s long-run equilibrium is the equilibrium that would occur if prices were perfectly flexible and always adjusted immediately to preserve full employment. 13.Which one of the following statements is the most accurate? The short and long-run equilibrium price level is the value of P satisfying P=MS/L(R,Y). 14.An increase in a country’s money supply causes a proportional increase in its price level. 15.A change in the level of the supply of money has no effect on the long-run values of the i nterest rate and real output . 16.Changes in the money supply growth rate are neutral in the long run . 17.A sustained change in the monetary growth rate will eventually affect equilibrium real money balances by raising the money interest rate.
18.Money demand behavior may change as a result of demographic trends or financial innovations such as electronic cash-transfer facilities. 19.Which one of the following statements is the most accurate? A permanent increase in a country’s money supply causes a proportional long-run depreciation of its currency against foreign currencies. 20.Wages do not enter indices of the price level directly, but they make up a large fraction of the cost of producing goods and services.

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