203-tutorial-7 - Econ 203 Tutorial #7 Date: Week of Mar....

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Econ 203 Tutorial #7 Date: Week of Mar. 5-11 Coverage: Chapter 9 Financial Markets, Interest Rates, Foreign Exchanges Rates and Aggregate Demand Part I: Multiple Choice Questions 1. Money Demand, when plotted against the interest rate, is downward sloping because: a. At higher interest rates the opportunity cost of holding money is lower. b. Banks typically want more savings when the interest rate is higher. c. At higher interest rates the opportunity cost of holding money is higher. d. Individuals dislike putting money in the bank. 2. Which of the following events does not shift the money demand curve? a. An increase in the interest rate. b. Citizens expect bank runs on major banks. c. The real income of the economy increases. d. The price level increases. 3. Which of the following would be most likely cause a movement along a money demand curve? a. a decrease in real income. b. an increase in real income. c. a decrease in the interest rate. d. an increase in the cost of converting other assets into money. 4. In the short-run macro model, an open market purchase of bonds by the central bank will a.raise the interest rate, reduce spending, and increase output. b. raise the interest rate, reduce spending, and decrease output. c.lower the interest rate, reduce spending, and decrease output. d. lower the interest rate, increase spending, and increase output. 5. An increase in Canadian real GDP will: a. increase Canadian exports of goods and services. b. increase US imports of Canadian goods and services. c. lower real GDP in Canada's major trading partners. d. reduce Canadian net exports. 6. Lower transport costs which result in lower prices for Chinese manufactures in the Canadian economy: a. reduce Chinese domestic consumption of manufactured goods. b.
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203-tutorial-7 - Econ 203 Tutorial #7 Date: Week of Mar....

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