Question :
11.Whichparticularinterestrate(s)doweattempttoexplainusingthetheoryofliquiditypreference?
a.onlythenominalinterestrate
b.boththenominalinterestrateandtherealinterestrate
c.o : 1262222
11.Whichparticularinterestrate(s)doweattempttoexplainusingthetheoryofliquiditypreference?
a.onlythenominalinterestrate
b.boththenominalinterestrateandtherealinterestrate
c.onlytheinterestrateonlong-termbonds
d.onlytheinterestrateonshort-termgovernmentbonds
12.AccordingtoJohnMaynardKeynes,
a.thedemandformoneyinacountryisdeterminedentirelybythatnation’scentralbank.
b.thesupplyofmoneyinacountryisdeterminedbytheoverallwealthofthecitizensofthatcountry.
c.theinterestrateadjuststobalancethesupplyof,anddemandfor,money.
d.theinterestrateadjuststobalancethesupplyof,anddemandfor,goodsandservices.
13.Accordingtothetheoryofliquiditypreference,
a.iftheinterestrateisbelowtheequilibriumlevel,thenthequantityofmoneypeoplewanttoholdislessthanthequantityofmoneytheFedhascreated.
b.iftheinterestrateisabovetheequilibriumlevel,thenthequantityofmoneypeoplewanttoholdisgreaterthanthequantityofmoneytheFedhascreated.
c.thedemandformoneyisrepresentedbyadownward-slopinglineonasupply-and-demandgraph.
d.Alloftheabovearecorrect.
14.Accordingtoclassicalmacroeconomictheory,
a.thepricelevelisstickyintheshortrunanditplaysonlyaminorroleintheshort-runadjustmentprocess.
b.foranygivenlevelofoutput,theinterestrateadjuststobalancethesupplyof,anddemandfor,money.
c.outputisdeterminedbythesuppliesofcapitalandlaborandtheavailableproductiontechnology.
d.Alloftheabovearecorrect.
15.Accordingtoclassicalmacroeconomictheory,
a.outputisdeterminedbythesuppliesofcapitalandlaborandtheavailableproductiontechnology.
b.foranygivenlevelofoutput,theinterestrateadjuststobalancethesupplyof,anddemandfor,loanablefunds.
c.givenoutputandtheinterestrate,thepriceleveladjuststobalancethesupplyof,anddemandfor,money.
d.Alloftheabovearecorrect.
16.Accordingtotheliquiditypreferencetheory,anincreaseintheoverallpricelevelof10percent
a.increasestheequilibriuminterestrate,whichinturndecreasesthequantityofgoodsandservicesdemanded.
b.decreasestheequilibriuminterestrate,whichinturnincreasesthequantityofgoodsandservicesdemanded.
c.increasesthequantityofmoneysuppliedby10percent,leavingtheinterestrateandthequantityofgoodsandservicesdemandedunchanged.
d.decreasesthequantityofmoneydemandedby10percent,leavingtheinterestrateandthequantityofgoodsandservicesdemandedunchanged.
17.Onthegraphthatdepictsthetheoryofliquiditypreference,
a.thedemand-for-moneycurveisvertical.
b.thesupply-of-moneycurveisvertical.
c.theinterestrateismeasuredalongthehorizontalaxis.
d.thepricelevelismeasuredalongtheverticalaxis.
18.Usingtheliquidity-preferencemodel,whentheFederalReservedecreasesthemoneysupply,
a.theequilibriuminterestrateincreases.
b.theaggregate-demandcurveshiftstotheright.
c.thequantityofgoodsandservicesdemandedisunchangedforagivenpricelevel.
d.theshort-runaggregate-supplycurveshiftstotheleft.
19.Inrecentyears,theFederalReservehasconductedpolicybysettingatargetforthe
a.sizeofthemoneysupply.
b.growthrateofthemoneysupply.
c.federalfundsrate.
d.discountrate.
20.Whileatelevisionnewsreportermightstatethat“TodaytheFedraisedthefederalfundsratefrom1percentto
1.25percent,”amorepreciseaccountoftheFed’sactionwouldbeasfollows:
a.“TodaytheFedtolditsbondtraderstoconductopenmarketoperationsinsuchawaythattheequilibrium federalfundsratewouldincreaseto1.25percent.”
b.“TodaytheFedraisedthediscountratebyaquarterofapercentagepoint,andthisactionwillforcethefederalfundsratetorisebythesameamount.”
c.“TodaytheFedtookstepstoincreasethemoneysupplybyanamountthatissufficienttoincreasethefederalfundsrateto1.25percent.”
d.“TodaytheFedtookasteptowardexpandingaggregatedemand,andthiswasdonebyraisingthefederalfundsrateto1.25percent.”
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