11) As a measure of the supply of the US dollar, M3. 1) has become the most impo
ID: 1105913 • Letter: 1
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11) As a measure of the supply of the US dollar, M3. 1) has become the most important measure for policy makers 2) has become as important as Ml and M2 3) has become more important than M1, and less important than M2 4) has become more important than M2, and less important than MI 5) has been discontinued 12) In the short run when prices don't have enough time to change, the Federal Reserve_. 1) can influence the level of interest rates in the economy 2) cannot influence the level of interest rates in the economy 3) can influence the level of interest rates in the economy but generally will not because it would be destabilizing 4) can only affect the amount of money in the economy 5) none of the above 13) Historically, economists have believed that, when the Federal Reserve lowers interest rates peingand GDIP 1) increases, decreases 2) increases; increases 4) decreases; increases 5) none of the above 14) Following the Crash of 2008 and the several rounds of Quantitative Easing by the Federal Reserve, the expectation in the question above has been . 1) substantially stronger than expected 2) somewhat stronger than expected 3) about the same as expected 4) somewhat weaker than expected 5) substantially weaker than expected 15) The transaction demand for money comes mostly from the fact that- - 1) money is a store of value 2) money is a medium of exchange 3) money is a unit of account 4) money has low opportunity cost 5) money has intrinsic valueExplanation / Answer
15) 2) Money is a medium of exchange
To make transaction people need money and this function of money is called money as a medium of exchange.
16) 4) The return that could have been earned from holding wealth in other assets.
If people save that money which they are holding in cash then they can earn interest. This interest is the opportunity cost.
17) 2) A rightward shift in the demand for money curve.
Increase in gdp means people require more money to purchase goods so demand for money increase in the market.
18) 2) Liquidity demand for money.
Money is kept by general public to purchase some goods and services in short notice which is called liquidity demand for money.
19) 4) Liquid
20) 3) to facilitate transactions
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