Question : 71) Since 1970, as a percent of GDP, M1 held : 1227888

 

 

71) Since 1970, as a percent of GDP, M1 held has steadily decreased. Which of the following can account for this fact?

A) Real GDP has increased since 1970.

B) The price level has risen since 1970.

C) Credit cards have become more widely available since 1970.

D) The nominal interest rate has steadily risen since 1970.

E) The nominal interest rate has steadily fallen since 1970.

72) In the United States since 1970, the quantity of M1 money people hold as a percentage of GDP has

A) increased.

B) decreased.

C) remained constant.

D) increased at first and the decreased.

E) decreased at first and then increased.

 

73) As a result of increased use of credit cards,

A) the demand for money has decreased and the demand for money curve has shifted leftward.

B) the demand for money has decreased and there has been a movement up along the demand for money curve.

C) the demand for money has decreased and there has been a movement down along the demand for money curve.

D) the equilibrium nominal interest rate has increased and bond prices have decreased. 

E) the equilibrium nominal interest rate has decreased and bond prices have fallen.

 

74) The supply of money curve is

A) upward sloping, showing the influence of the interest rate.

B) horizontal because interest rates are fixed at any one moment.

C) vertical because the quantity of money is fixed at any one moment.

D) downward sloping, showing the negative influence of the interest rate.

E) horizontal because the Fed controls the quantity of money supplied.

75) In the demand and supply model of the money market, the

i.supply of money curve is a vertical straight line.

ii.supply of money is the quantity that must be held by households and firms.

iii.quantity of money is determined by Fed actions.

A) i only

B) ii only

C) iii only

D) ii and iii

E) i, ii, and iii

 

76) On any given day, ________ changes to achieve equilibrium in the money market.

A) real GDP

B) the price level

C) the inflation rate

D) the nominal interest rate

E) the real interest rate

 

77) Every day, ________ changes to make the quantity of money demanded equal the quantity of money supplied.

A) real GDP

B) the money supply

C) the price level

D) the nominal interest rate

E) the inflation rate

78) In the money market, if the nominal interest rate is below the equilibrium level,

A) the quantity of money demanded exceeds the quantity of money supplied.

B) the quantity of money supplied exceeds the quantity of money demanded.

C) asset prices will rise.

D) the demand for money curve will shift leftward.

E) the supply of money curve will shift leftward.

 

79) Suppose that the equilibrium nominal interest rate is 4 percent and the equilibrium quantity of money is $1 trillion. At any interest rate above 4 percent,

A) less than $1 trillion will be demanded and bond prices will increase.

B) less than $1 trillion will be demanded and bond prices will fall.

C) more than $1 trillion will be supplied and bond prices will fall.

D) more than $1 trillion will be supplied and the interest rate will rise.

E) there is a shortage of money and the interest rate will rise.

 

80) Suppose that the equilibrium nominal interest rate is 5 percent and the equilibrium quantity of money is $1 trillion. At any interest rate below 5 percent,

A) the interest rate will rise and bond prices will fall.

B) the interest rate will fall and bond prices will fall.

C) there will be a surplus of money and bond prices will fall.

D) there will be a surplus of money and bond prices will increase.

E) the supply of money will decrease.

 

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