WK 4 - PRACTICE: MONEY AND THE FEDERAL RESERVE PART III
Because the money supply is independent of the interest rate, it is a(n) _____ line.
vertical
Because transaction money demand is independent of the interest rate, it is a _____ line.
vertical
_____ can affect the money supply by increasing or decreasing the number of loans they make.
Banks
What is the payment made to agents that lend or save money called?
Interest
_____ is the payment made to agents that lend or save money. (Please add only one word for the blank)
Interest
Which term is used for a situation in which the quantity supplied is less than the quantity demanded at the current market price?
Shortage
Which of the following statements is correct?
The interest rate paid on loans differs from the interest rate earned on savings.
_____ money demand is related to the level of nominal GDP.
Transaction
______ money demand is the demand for money to be used to purchase goods and services.
Transaction
Which of the following are the determinants of money demand? Uncertainty about the future Changes in the price level Changes in real GDP Changes in the stock of currency
Uncertainty about the future Changes in the price level Changes in real GDP
Since we can't use stocks and bonds for daily transactions, people hold some of their savings as _____ instead of putting it all in stocks or bonds.
cash
Changes in the price level, changes in real GDP, and uncertainty about the future are all considered:
determinants of money demand.
The interest rate we earn on a savings account:
differs from the interest rate we pay on loans.
A surplus is a situation in which the quantity supplied is ______ than the quantity demanded at the current market price.
greater
The elasticity of money supply is perfectly _____.
inelastic
Because the Federal Reserve fixes the money supply at a particular amount, changes in the _____ rate do not cause a change in the quantity of money supplied.
interest
The _____ rate is the payment made to agents that lend or save money expressed as an annual percentage of the monetary amount lent or saved.
interest
We construct the total demand for money by adding the transaction and asset demands at each _______ .
interest rate
The interest rate:
is the price of money.
A shortage is a situation in which the quantity supplied is _____ than the quantity demanded at the current market price.
less
The _____ market is a market in which the demand for and supply of money determine an interest rate or opportunity cost of holding money balances.
money
A money market is a market in which:
money supply and demand determine an interest rate.
Interest is the:
payment made to agents that lend or save money.
In order to conduct daily transactions and have a stable asset for future purchases,:
people hold some of their savings as money.
A(n) _____ is a situation in which the quantity supplied is greater than the quantity demanded at the current market price.
surplus
The institutions that largely influence money supply are:
the banks and the Fed.
The demand for money comes from two sources: _____ demand and _____ demand.
transaction, asset
