Final Exam Practice Quiz.docx

What is the equilibrium interest rate a 2 percent b 4

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12- What is the equilibrium interest rate? A. 2 percent.B. 4 percent.C. 6 percent.D.8 percent. 13- a decrease in the money supply of $20 billion will cause the equilibrium interest rate to fall by 4 percentage points. B. fall by 2 percentage points. C. rise by 4 percentage points. D. rise by 2 percentage points. 14- A decrease in the interest rate will cause a(n) A. increase in the transactions demand for money. B. decrease in the transactions demand for money. C. decrease in the amount of money held as an asset. D. increase in the amount of money held as an asset.
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15- There is an asset demand for money primarily because of which function of money? A. legal tender B. store of value C. measure of value D. medium of exchange 16- . An increase in nominal GDP will A. increase the transactions demand and the total demand for money. B. decrease the transactions demand and the total demand for money. C. increase the transactions demand for money but decrease the total demand for money. D. decrease the transactions demand for money but increase the total demand for money. 17- When the interest rate falls, the A. asset demand for money decreases. B. transactions demand for money increases. C. total amount of money demanded increases. D. total amount of money demanded decreases. 18- . Loans of the Federal Reserve Banks to commercial banks are A. a liability of the Federal Reserve Banks and of the commercial banks. B. an asset of the Federal Reserve Banks and of the commercial banks. C. a liability of the Federal Reserve Banks and an asset for commercial banks. D. an asset of the Federal Reserve Banks and a liability for commercial banks. 19- . The lending ability of commercial banks increases when the A. reserve ratio is raised. B. Treasury collects tax revenues. C. Fed sells securities in the open market. D. Fed buys securities in the open market. 20- Which one of the following is a tool of monetary policy often used by the Fed for altering the reserves of commercial banks?
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21. A market:
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