Question :
41) The demand for money (MD) function defines the relationship : 1384456
41) The demand for money (MD) function defines the relationship between
A) interest rates and bond prices.
B) inflation and bond prices.
C) interest rates and financial assets.
D) the quantity of money demanded and the price level.
E) the quantity of money demanded and the rate of interest.
42) Refer to Figure 28-1. A rightward shift of the money demand curve can be caused by
A) an increase in the price level.
B) a decrease in the price level.
C) a decrease in real GDP.
D) an increase in the rate of interest.
E) a decrease in the rate of interest.
43) Refer to Figure 28-1. A leftward shift in the money demand curve can be caused by by
A) an increase in the rate of interest.
B) a decrease in the rate of interest.
C) an increase in the price level.
D) a decrease in real GDP.
E) an increase in real GDP.
44) Refer to Figure 28-1. Given the money demand curve, , an increase in the quantity of money demanded from to can be caused by
A) an increase in the price level.
B) a decrease in the price level.
C) an increase in real GDP.
D) an increase in the rate of interest.
E) a decrease in the rate of interest.
45) Refer to Figure 28-1. Given the money demand curve, , a decrease in the quantity of money demanded from can be caused by
A) an increase in the price level.
B) a decrease in the price level.
C) an increase in real GDP.
D) an increase in the rate of interest.
E) a decrease in the rate of interest.
46) If there are just two assets, bonds and money, then an excess demand for money implies
A) an excess supply of bonds.
B) an excess demand for bonds.
C) equilibrium in the bond market.
D) an indeterminate equilibrium in the bond market.
E) nothing about conditions of demand for the other financial asset.
47) Assume there are just two assets, money and bonds. We can expect that an individual with a given level of wealth will
A) hold less money when bond prices rise.
B) hold more money when the current interest rate is very low.
C) not hold money as long as bonds pay a positive rate of interest.
D) hold lots of money even at very high interest rates.
E) hold less money when the current interest rate is very low.
48) According to the “liquidity preference” theory of the rate of interest, if the supply of money increases, then, ceteris paribus, bond prices will
A) fall as the rate of interest rises.
B) rise as the rate of interest rises.
C) fall as the rate of interest falls.
D) rise as the rate of interest falls.
E) stay the same.
49) If the general price level were to increase, other things being equal, the money demand function would
A) not be affected.
B) shift to the left.
C) shift to the right.
D) shift, but the direction of the shift cannot be predicted.
E) become steeper but not shift.
50) If the annual market interest rate is 20%, the annual opportunity cost of having $50 cash in your pocket is
A) $0.
B) $2.
C) $10.
D) $50.
E) $1000.
