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Define transaction demand for money. Which of the following statements is true? 

a) the speculative demand for money at possible interest rates gives the demand curve for the money an upward slope. 

b) there is an inverse relationship between the quantity of money demanded and interest rates

c) according to the quantity theory of money, any change in the money supply will have no effect on the price level. 

d) all of the answers are right. 

 

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Vaishnavi Kanukurti
Vaishnavi KanukurtiLv10
26 Oct 2020
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Related questions

Which of the following statements is true?

a) the speculative demand for money at possible interest rates gives the demand curve for money its upward slope.

b) there is an inverse relationship between the quantity of money demanded and interest rates

c) according to the quantity theory of money any change in the money supply will have no effect on the price level. 

d) all of the answers are correct. 

 

3.If the demand for labor is plotted against the money wage, with the money wage on the vertical axis, then

A)an increase in the price level will cause the labor demand schedule to shift to the right.

B)an increase in the money wage will cause the labor demand schedule to shift to the left.

C)an increase in the money wage will cause the labor demand schedule to shift to the right.

D)the labor demand schedule will be upward sloping.

5. According to the classical model, a 10-percent increase in the money supply, holding everything else constant, will lead to

A) a 10% increase in prices, a 10% increase in the real wage, and a 10% increase in interest rates.

B)a 10% increase in prices, a 10% increase in the money wage, and a 10% increase in interest rates.

C)a 10% increase in prices, a 10% increase in the money wage, and no change in interest rates.

D)a 10% increase in prices and no change in the money wage or interest rates.

E)none of the above.

7. If the propensity to hold money is 6 and the money supply is 12, then the classical aggregate demand curve is

A) P = 2Y

B)P/Y = 48

C)P = 1/(2Y)

D)P = 2/Y

Evaluate whether each of the following statements is true or false. Explain your answer and provide a supporting rationale.

a. If the real money demand is greater than the real money supply, interest rates must rise to reach equilibrium in the money market as institutions sell bonds to obtain more money.

b. The federal government's control of the money supply, which influences interest rates, is the primary tool that policymakers use to impact the macro economy.

c. A decrease in the reserve requirement decreases the money supply because banks have fewer reserves.

d. The real money demand curve shows how households and businesses change their spending in response to changes in the interest rate.

e. Both an increase in the nominal money supply by the Federal Reserve and an increase in the price level will cause the real money supply curve to shift to the right.

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