PRINCIPLES OF MACROECONOMICS ASSIGNMENT. 8 question

Question Description

2.When interest rates rise, the transactions demand for money usually

decreases.

increases.

decreases initially and then increases to the original position.

does not change.

3.When the dollar appreciates,

foreign residents demand fewer of our goods, and U.S. residents desire to purchase fewer foreign goods.

foreign residents demand more of our goods, and U.S. residents desire to purchase fewer foreign goods.

foreign residents demand fewer of our goods, and U.S. residents desire to purchase more foreign goods.

foreign residents demand more of our goods, and U.S. residents desire to purchase more foreign goods.

4.According to the quantity theory of money, the price level decreases in equal proportion to

an increase in the real interest rate.

a decrease in the money supply.

a decrease in the nominal interest rate.

an increase in the income velocity of money

5.。。Which of the following is a factor influencing the demand for money?

Asset demand

Precautionary demand

Transactions demand

All of the above are correct

6.。The price of bonds and the interest rate are

unrelated.

related, but we are not sure how.

positively related.

inversely related.

7.。A contractionary monetary policy causes

higher interest rates, which increases the foreign demand for U.S. financial instruments, which causes interest rates to decrease. There is no effect on net exports.

lower interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.

higher interest rates, which increases the international price of the dollar and decreases net exports.

higher interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.

8.。。An excess quantity of money demanded will lead to a rise in

bond prices.

investment.

income.

the interest rate.

9.According to the equation of exchange, if M = $400, P = 8, and Y = $200, then V equals

100.

160.

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