Homework 2-key - NAME_ Homework 2 - ECO 215 - SPRING 2008 -...

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NAME________________________________________________________________________ Homework 2 - ECO 215 - SPRING 2008 - CUTLER Due at the beginning of class on Monday, February 25th MULTIPLE-CHOICE questions - Please, select the letter which best answers each question, and enter it into the table provided at the end of the homework form. Each multiple-choice question is worth 0.5 point. 1. Which of the following is NOT a function of money? a Capital used to produce goods and services b Store of value c Medium of exchange d Unit of account Answer: A 2. What is M1? a A monetary aggregate that includes only cash. b A monetary aggregate that includes currency in circulation and in Federal Reserve vaults. c A monetary aggregate that includes currency in circulation and checkable deposits. d A monetary aggregate that includes currency in circulation, checkable and time deposits. Answer: C 3. Which economic agent determines money supply in the U.S.? a Commercial banks b Consumers c Government d The Federal Reserve Answer: D 4. What are the determinants of the aggregate money demand? a Inflation, price level, exchange rate and interest rate b Exchange rate, national income and interest rate c Inflation rate, price level and national income d Price level, national income and interest rate e Money supply, national income and interest rate Answer: D 5. Which of the following is true about the short-run equilibrium on the money market? a If money supply rises, equilibrium interest rate rises as well. b If national income rises, equilibrium interest rate falls. c Real money supply is completely elastic with respect to the interest rate. d The equilibrium amount of real money balances does not depend on the real money demand. Answer: there is no correct answer, so all answers are accepted as correct.
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Homework 2-key - NAME_ Homework 2 - ECO 215 - SPRING 2008 -...

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