Exercise Topic 12 - Topic 12. The Influence of Monetary and...

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Topic 12. The Influence of Monetary and Fiscal Policy on Aggregate Demand 1. The opportunity cost of holding money is the a. dollar cost necessary to change other assets into money. b. time cost of accessing funds. c. value of the goods and services a person is able to obtain with the money. d. interest a person could have earned by holding other forms of wealth instead. 2. Which of the following is the opportunity cost of money? a. money being a means of payment b. the trouble of having to get money out of the bank c. the interest forgone by holding money d. the ability to purchase things at a moment’s notice 3. When the interest rate falls, a. the opportunity cost of holding money rises. b. people shift out of holding interest-yielding assets and into holding more liquid forms of money. c. the quantity of money people will hold decreases. d. investment spending decreases. 4. The equilibrium interest rate occurs in the money market where the a. quantity of money available is zero. b. the maximum quantity of funds has been borrowed and loaned. Topic 12 - 1 -
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c. the money supply is equal to the money demand. d. the quantity of money demanded is zero. 5. As the price level increases, the money demand curve will a. shift to the left. b. become steeper. c. stay in the same position. d. shift to the right. 6. The money supply curve is vertical because a. real income does not influence the quantity of money supplied. b. the price level does not influence the level of spending. c. only the interest rate influences the quantity of money supplied. d. the Federal Reserve sets the money supply. 7. The federal funds rate is the a. federally mandated upper limit on credit card interest rates. b. interest rate that banks charge to their most preferred clients.
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This note was uploaded on 07/15/2011 for the course ACCT 122 taught by Professor Barry during the Spring '11 term at Universitas Pelita Harapan.

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Exercise Topic 12 - Topic 12. The Influence of Monetary and...

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