Monetary Economics Quiz 10
What is the average cash holdings of someone who visits the ATM once every 8 days and spends $25 on a daily basis?
$100
The income effect refers to the situation when a higher nominal interest rate results from a(n)
increase in income that increases the demand for money.
The ____________ relationship between the money supply and the nominal interest rate is referred to as the _____________.
inverse; liquidity effect
The model in which money demand and supply determine the nominal interest rate is known as the
liquidity-preference model
In the liquidity-preference model, the slope of the money supply curve implies that
nominal interest rate has no effect on the money supply
In the ATM model, if the nominal interest rate declines, then the
number of days between visits to the ATM and the quantity of money demanded both rise.
In the ATM model of money, the opportunity cost of holding money is determined by
the nominal interest rate
In the ATM model, the demand for money depends on
the nominal interest rate, the cost of obtaining cash, the probability of loss or theft, and the amount of spending
In the ATM model, if the cost of going to an ATM increases,
both the number of days between visits to the ATM and the quantity
In the ATM model, if the probability of loss or theft decreases, then
both the number of days between visits to the ATM and the quantity of money demanded rises