m 22
The equilibrium point in the money market model is determined where the money supply curve intersects the money demand curve.
T
The interest rate is determined by the supply and demand for money according to the liquidity preference model of the interest rate.
T
The money demand curve is negatively sloped, which indicates that a higher interest rate leads to a higher opportunity cost of holding money and reduces the nominal quantity of money demanded.
T
The liquidity preference model shows how monetary policy works.
T
The opportunity cost of holding money is measured by the foregone return that could have been earned by holding other financial assets.
T
Which of the following is an important factor that causes the money demand curve to shift? Changes in banking institutions Changes in Real gross domestic product (GDP) Changes in banking technology Changes in the aggregate price level All of the above
All of the above
Which of the following is an example of a long-term interest rate?
An interest rate on a two-year certificate of deposit
An example of a short-term interest rate would be an interest rate on a five-year certificate of deposit.
F
Interest rates on financial assets that mature several years in the future refer to short-term interest rates.
F
The money supply curve shows how the nominal quantity of the money demand varies with the interest rate.
F
