Econ 211 Exam 3

in 2002 mortgage rates fell and mortgage lending increased. Which of the following could explain both of these changes?

the SUPPLY of loanable funds shifted RIGHTWARD

the velocity of money is

the average number of times per year a dollar is spent

When there is a reserve requirement, banks

may hold MORE than, but not less than, the required quantity of reserves

commodity money is

money with intrinsic value

The money multiplier equals

1/R, where R represents the reserve ratio for all banks in the economy

If a reform of the tax laws encourages greater saving, the result would be

LOWER interest rates and GREATER investment

the classical dichotomy argues that changes in the money supply

affect nominal variables, but not real variables

to increase the money supply feds could

auction more loans to banks

If the federal open market committee decides to increase money supply, then the federal reserve...

creates dollars and uses them to purchase government bonds from the public

crowding occurs when

investment DECLINES because a budget deficit makes interest rate RISE

for a given interest rate, an increase in inflation makes the after tax real interest rate

decrease, which DISCOURAGES savings

If there is a shortage of loanable funds, then

the quantity of loanable funds DEMANDED is greater than the quantity of loanable funds supplied and the interest rate is BELOW equilibrium