Chapter 11 true false

Principles of Macroeconomics: A Study Guide

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Chapter 11: Money Demand, The Equilibrium Interest Rate, and Monetary Policy True or False
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1. Interest is a fee that a lender pays to a borrower for the use of funds. TRUE FALSE 2. The higher the interest rate, the higher the opportunity cost of holding money; thus, the higher the demand for money. TRUE FALSE 3. A reasonable measure of the number of transactions in the economy is aggregate output. TRUE FALSE
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4. Increases in the price level cause an increase in the demand for money. TRUE FALSE 5. An excess supply of money will cause households and firms to buy more bonds, driving interest rates down. TRUE FALSE 6. If the Fed wants to create upward pressure on the interest rate, it can buy government
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Unformatted text preview: securities in the open market. TRUE FALSE 7. An increase in the price level is like an increase in output. Both events cause an increase in money demand. TRUE FALSE 8. Easy monetary policy refers to the Fed policies that expand the money supply. TRUE FALSE 9. If the Fed wants to stimulate economic activity, it will increase the money supply. TRUE FALSE 10. The main goal of the Fed is to try to stimulate economic activity continuously, by expanding the money supply when the demand for money increases. TRUE FALSE...
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This homework help was uploaded on 02/01/2008 for the course EBGN 312 taught by Professor Sosa during the Fall '02 term at Mines.

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Chapter 11 true false - securities in the open market. TRUE...

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