Question :
11.3 The Equilibrium Interest Rate
Refer to the information provided in : 1381453
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. There is a surplus of money and the interest rate will decline at an interest rate of
A) 0%.
B) 2%.
C) 5%.
D) 6%.
2) Refer to Figure 11.3. There is a shortage of money and the interest rate will rise at an interest rate of
A) 8%.
B) 5%.
C) 2%.
D) cannot determine from the information given
3) Refer to Figure 11.3. A(n) ________ , ceteris paribus, will likely decrease the equilibrium interest rate without changing equilibrium money holdings.
A) increase in the money demand
B) decrease in the money supply
C) increase in the nominal aggregate output
D) decrease in the nominal aggregate output
4) Refer to Figure 11.3. A(n) ________ , ceteris paribus, will likely decrease the equilibrium interest rate without changing equilibrium money holdings.
A) decrease in the money demand
B) increase in the money supply
C) increase in the nominal aggregate output
D) decrease in the nominal aggregate output
5) Refer to Figure 11.3. A(n) ________ , ceteris paribus, will likely decrease the equilibrium interest rate and increase equilibrium money holdings.
A) decrease in the nominal aggregate output
B) decrease in the money supply
C) increase in the money supply
D) increase in the money demand
6) Refer to Figure 11.3. An decrease in the ________ and an increase in the ________ will, for sure, increase the equilibrium interest rate.
A) money supply; nominal aggregate output
B) money demand; money supply
C) price level; money demand
D) nominal aggregate output; price level
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. There is an excess supply of money of $400 billion at an interest rate of
A) 8%.
B) 5%.
C) 3%.
D) < 3%.
8) Refer to Figure 11.4. There is an excess demand for money of $400 billion at an interest rate of
A) 8%.
B) 5%.
C) 3%.
D) < 3%.
9) Refer to Figure 11.4. At an interest rate of 5%
A) there is an excess supply of money of $400 billion.
B) there is an excess demand for money of $800 billion.
C) there is an excess demand for money of $400 billion and an excess supply of money of $800 billion.
D) there is no excess supply of money or demand for money.
10) Refer to Figure 11.4. Firms and households will attempt to reduce their holdings of money by buying bonds at an interest rate of
A) < 3%.
B) 3%.
C) 5%.
D) 8%.
11) Refer to Figure 11.4. Firms and households will attempt to increase their holdings of money by selling bonds at an interest rate of
A) 3%.
B) 5%.
C) 8%.
D) >8%.
12) Refer to Figure 11.4. Firms and households are satisfied with the amount of money they are holding at an interest rate of
A) 3%.
B) 5%.
C) 8%.
D) >8%.
