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