1.The demand for money curve represents the relationship between the quantity of money demanded and:

A)   the quantity of money supplied.

B)   short-term interest rates.

C)   the price level.

D)   economic output.

2.In a recent economic forum meeting, Jason Federmeyer of the Bank of Detroit, and Lawrence Lobovsky of the Bank of Tulsa, were discussing the demand for money and how it has changed over the years. Federmeyer made the following two statements to Lobovsky:

Statement 1: Financial innovation has significantly affected the demand for money. The increased use of credit cards and debit cards, interest-bearing checking accounts, internet banking and even the large number of ATMs around the world have all helped to increase the demand for money above what it would have been if only the increase in real GDP were at work.

Statement 2: Although the quantity of money demanded is largely determined by interest rates, the supply of money is determined by the central bank and is independent of interest rates.

Are Statement 1 and Statement 2 as made by Federmeyer correct?

A)                   Incorrect                             Incorrect

B)                   Correct                               Incorrect

C)                   Correct                                Correct

D)                   Incorrect                              Correct

答案和详解如下：

1.The demand for money curve represents the relationship between the quantity of money demanded and:

A)   the quantity of money supplied.

B)   short-term interest rates.

C)   the price level.

D)   economic output.

The correct answer was B)

The demand for money curve represents the relationship between short-term interest rates and the quantity of real money that households and firms demand to hold.

2.In a recent economic forum meeting, Jason Federmeyer of the Bank of Detroit, and Lawrence Lobovsky of the Bank of Tulsa, were discussing the demand for money and how it has changed over the years. Federmeyer made the following two statements to Lobovsky:

Statement 1: Financial innovation has significantly affected the demand for money. The increased use of credit cards and debit cards, interest-bearing checking accounts, internet banking and even the large number of ATMs around the world have all helped to increase the demand for money above what it would have been if only the increase in real GDP were at work.

Statement 2: Although the quantity of money demanded is largely determined by interest rates, the supply of money is determined by the central bank and is independent of interest rates.

Are Statement 1 and Statement 2 as made by Federmeyer correct?

Statement 1

Statement 2

A)                    Incorrect                              Incorrect

B)                    Correct                                Incorrect

C)                    Correct                                 Correct

D)                    Incorrect                               Correct

The correct answer was D)

Overall, financial innovation has reduced the demand for money below what it would have been if only the increase in real GDP was at work. The demand for money is determined, for the most part, by interest rates. However, the quantity of money supplied is determined by the central bank and is independent of the interest rate.

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