Question : 11.3   The Equilibrium Interest Rate Refer to the information provided in : 1381165

 

11.3   The Equilibrium Interest Rate

 

Refer to the information provided in Figure 11.3 below to answer the questions that follow.

 

 

Figure 11.3

 

1) Refer to Figure 11.3. At an interest rate of 6%, there is a

A) shortage of money and the interest rate will decline.

B) shortage of money and the interest rate will rise.

C) surplus of money and the interest rate will decline.

D) surplus of money and the interest rate will rise.

 

2) Refer to Figure 11.3. At an interest rate of 3%, there is a

A) shortage of money and the interest rate will decline.

B) shortage of money and the interest rate will rise.

C) surplus of money and the interest rate will decline.

D) surplus of money and the interest rate will rise.

 

3) Refer to Figure 11.3. A decrease in nominal aggregate output, ceteris paribus, will likely

A) increase the equilibrium interest rate without changing equilibrium money holdings.

B) decrease both the equilibrium interest rate and equilibrium money holdings.

C) increase the equilibrium interest rate and decrease equilibrium money holdings.

D) decrease the equilibrium interest rate without changing equilibrium money holdings.

4) Refer to Figure 11.3. An increase in nominal aggregate output, ceteris paribus, will likely

A) increase both the equilibrium interest rate and equilibrium money holdings.

B) decrease the equilibrium interest rate without changing equilibrium money holdings.

C) increase the equilibrium interest rate without changing equilibrium money holdings.

D) keep the equilibrium interest constant and increase equilibrium money holdings.

 

5) Refer to Figure 11.3. An increase in the money supply, ceteris paribus, will likely

A) increase the equilibrium interest rate and decrease equilibrium money holdings.

B) increase the equilibrium interest rate without changing equilibrium money holdings.

C) decrease the equilibrium interest rate and increase equilibrium money holdings.

D) decrease the equilibrium interest rate without changing equilibrium money holdings.

 

6) Refer to Figure 11.3. A decrease in the money supply and an increase in nominal aggregate output will, for sure,

A) increase the equilibrium interest rate.

B) decrease the equilibrium interest rate.

C) increase equilibrium money holdings.

D) decrease equilibrium money holdings.

Refer to the information provided in Figure 11.4 below to answer the questions that follow.

 

Figure 11.4

 

7) Refer to Figure 11.4. At an interest rate of 8%, there is

A) an excess demand for money of $400 billion.

B) an excess supply of money of $800 billion.

C) an excess supply of money of $400 billion.

D) an excess demand for money of $800 billion.

 

8) Refer to Figure 11.4. At an interest rate of 3%, there is

A) an excess supply of money of $400 billion.

B) an excess supply of money of $800 billion.

C) an excess demand for money of $800 billion.

D) an excess demand for money of $400 billion.

 

9) Refer to Figure 11.4. The money market will be in equilibrium at an interest rate of

A) 0%.

B) 3%.

C) 5%.

D) 8%.

10) Refer to Figure 11.4. At an interest rate of 8%, firms and households

A) will attempt to increase their holdings of money by selling bonds.

B) are satisfied with the amount of money they are holding.

C) will attempt to increase both their holdings of money and their holdings of bonds.

D) will attempt to reduce their holdings of money by buying bonds.

 

 

 

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