Case_macro8c1_Ch11 - Chapter 11 Money Demand, the...

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Unformatted text preview: Chapter 11 Money Demand, the Equilibrium Interest Rate, and Monetary Policy Principles of Macroeconomics , Case/Fair, 8e 11.1 The Demand for Money Multiple Choice For cha pte r 25 1 When you deposit $100 in a bank, the bank A . pays you an interest rate because the deposit is a liability to you. B . charges you an interest rate because the deposit is a liability to you. C . pays you an interest rate because the deposit is a liability to the bank. D . pays you an interest rate because the deposit is an asset to the bank. Answer : C When you borrow $2,000 from a bank, you ________ an interest rate because the loan is ________. A . pay; a liability to you B . pay; an asset to you C . receive; a liability to you D . pay; a liability to the bank Answer : A Your money demand is the amount of money you wish to A . earn. B . accumulate before you retire. C . earn per hour. D . leave outside any interest-bearing account. Answer : D Sally' s income is $2,000 a month. She deposits $500 in a saving account, buys $200 worth of government securities, and leaves the rest for daily transactions. Sally's money demand is A . $2,000. B . $1,300. C . $700. D . $1,500. Answer : B Mary is paid on the 1st of every month and her rent is due on the 15th of every month. This is an example of the A . cash flow problem. B . financial float. C . money management problem. D . nonsynchronization of income and spending. Answer : D The averag e monthly balance in Derek's bank account is $750. Derek spends the same amount of money each day during the month and at the end of the month his account balance is $0. Derek's monthly starting balance is A . $750. B . $1500. C . $1,000. D . $16.67. Answer : B average balance=(x+0/2 )=750 => x=1500 The averag e monthly balance in Bill's bank account is $1,000. Bill spends the same amount of money each day during the month, and at the end of the month his account balance is $0. Bill's monthly starting balance is A . $3,000. B . $1,500. C . $2,000. D . $30. Answer : C The averag e monthl y balance in Derek's bank account is $300. Derek spends the same amount of money each day during a 30-day month, and at the end of the month his account balance is $0. Derek spends his money at a constant rate of ________ per day. A . $20 B . $30 C . $50 D . $75 Answer : A (300=(x+0)/2) X=starting balance=600 600/30=20 The averag e monthl y balance in Bill's bank account is $900. Bill spends the same amount y balance in Bill's bank account is $900....
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Case_macro8c1_Ch11 - Chapter 11 Money Demand, the...

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