ECO 204 Chapter Notes - Chapter 17: Alan Greenspan, Aggregate Demand, Money Supply

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ashleycrumb1

3 May 2022

School

University of Dayton

Department

Economics

Course

ECO 204

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Document Summary

Chapter 17: the supply and demand of money. The supply and demand of money borrow as interest rates fall. Demand for money: measured by the quantity of money people are willing and able to hold or. Transactions demand for money: money demanded, needed, or held in checking accounts or. Demand for money on hand for daily transactions such as car payments, groceries, and utilities as medical bills. Precautionary demand for money: money people keep in case of unexpected emergencies such: people usually ensure their bank accounts have enough to cover unexpected expenses. Speculative demand for money: money demanded in addition to the two previous demands or for future financial opportunities: people do not want to tap into stocks, bonds, or retirement funds for these expenses. Demand of money increases as interest rates fall due to the decrease in opportunity cost for holding that money.

Related Questions

Which of the following is correct?

a. The asset demand for money is downsloping because the opportunity cost of holding money declines as the interest rate declines.

b. The asset demand for money is downsloping because bond prices and interest rates are directly related.

c. The transaction demand for money is downsloping because the opportunity cost of holding money varies inversely with the interest rates.

d. The asset demand for money is downsloping because the opportunity cost of holding money increases as the interest rate rises.

bronzeeel636

Please answer all 3 thank you!!

The asset demand for money is

Question 43 options:

greater at low interest rates, because the opportunity cost of holding money is low.

greater at high interest rates as investors can earn more on their investments.

lower at low interest rates, because the opportunity cost of holding money is high.

greater at low interest rates, because the opportunity cost of holding money is high.

If the Fed sells U.S. government securities , the

Question 44 options:

money supply increases, and the money supply curve shifts to the left.

money supply decreases, and the money supply curve shifts to the left.

money supply decreases, and the money supply curve shifts to the right.

money supply increases, and the money supply curve shifts to the right.

The Federal Open Market Committee engages in contractionary monetary policy by

Question 45 options:

	creating excess reserves.
	buying bonds.
	selling bonds.
	lowering interest rates.

lavendercoyote968

An increase in nominal GDP increases the demand for money because:

A. interest rates will rise.

B. more money is needed to finance a larger volume of transactions.

C. bond prices will fall.

D. the opportunity cost of holding money will decline.

cyanhound711

ECO 204 Chapter Notes - Chapter 17: Alan Greenspan, Aggregate Demand, Money Supply

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