Q1. If firms and households decide to reduce their currency holdings and increase their holdings of funds in their checking accounts by an equal amount, what will be the impact on the money supply if the U.S. Federal Reserve does not undertake any offsetting actions? A) There will be no direct impact on the money supply, however, banks’ excess reserves will decrease, which will cause them to decrease their loans, thereby leading to an indirect decrease in the money supply. B) There will be no direct impact on the money supply. However, banks’ excess reserves will increase, which will enable them to increase their loans, thereby leading to an indirect increase in the money supply. C) There will be no direct or indirect impact on the money supply because the decrease in currency holdings will be exactly offset by the increase in the funds in the checking accounts.
Q2. If the U.S. Federal Reserve decides to decrease the money supply, which of the following is most likely to occur in the short run? A) An increase in the velocity of money similar to decrease in the money supply. B) A decrease in the unemployment rate. C) An increase in the real rate of interest.
Q3. If households are holding larger real money balances than they desire, which of the following is least likely? A) The central bank must sell securities to absorb the excess money supply and establish equilibrium. B) The interest rate is higher than its equilibrium rate in the market for real money balances. C) The opportunity cost of holding money balances will decrease.
Q4. Which of the following is determined by the equilibrium between the demand for money and the supply of money? A) Money supply. B) Inflation rate. C) Interest rate.
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发表于 2009-1-15 15:16
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