B) 4 percent 10 percent D) -4 percent 2) If unplanned investment is positive, fi
ID: 1129942 • Letter: B
Question
B) 4 percent 10 percent D) -4 percent 2) If unplanned investment is positive, firms will A) increase; fall production and output wil B) cut; rise 2) G) increase; rise D) cut, fall 3) An autonomous easing of monetary policy 3) A) causes an upward movement along the monetary policy curve. B) causes a downward movement along the monetary policy curve. C) shifts the monetary policy curve u D) shifts the monetary policy curve downward. 4) When interest rates rise in the United States (with the price level fixed), the value of the dollar 4) -domestic goods become expensive, and net exports B) falls; more; rise A) rises; less; fall C) rises; more:fallD) falls; less; fall 5) 5) The theory of portfolio choice indicates that higher interest rates make moneydesirable D) more; falls and the demand for real money balances B) less; falls A) more; rises C) less; rises 6)The quantity theory of inflation indicatesthat ifth e aggregate output is growing at 3% per year and the growth rate of money is 5%, then inflation is A) 8%. B)-2%. C)2% D) 1.6%. 7) If the price level increases from 400 in year 1 to 420 in year 2, the rate of inflation from year 1 to7) year 2 is D)20%. A)50%. B) 10%. 8) 8) Everything else held constant,if disposable income increases by 200 and consumption expenditure increases by 150, the mpe is D) 0.75. B) 0.15. C) 0.5. 0. 9) 9) If an individual moves money from a small-denomination time deposit to a demand deposit account A) M1 increases and M2 decreases B) M1 stays the same and M2 increases. C) M1 stays the same and M2 stays the same. D) M1 increases and M2 stays the same. 10) B) precautionary motive D) speculative motive. 10) The demand for money as a cushion against unexpected contingencies is called the A) transactions motive. C) insurance motive.Explanation / Answer
2. If unplanned investment is positive ,firms will cut production and output will fall.
3. An autonomous easing of monetary policy shifts the monetary policy curve downward to stimulate the economy.
4. When interest rates rise in the United states (with the price levels fixed) ,the value of the dollar rises , domestic goods become more expensive because of rise in prices and therefore, net exports fall.
5. The theory of portfolio choice indicates the higher interest rate make money less desirable and the demand for real money balances falls.
6. The quantity theory of inflation indicates that if aggregate output is growing at 3% per year and the growth rate of money is 5% ,then inflation is (5-3)% =2%.
7. If the price level increases from 400 in year 1 to 420 in year 2 ,the rate of inflation from year 1 to year2 is
[(420-400)/400](100)= 5%
8. Everything else held constant ,if disposable income increase by 200 and consumption expenditure increases by 150, the mpc is (150/200) =0.75.
9. If a individual moves money from a small denomination time deposit to a demand deposit account , then M1 increases and M2 stays the same. Because demand deposit account is M1.
10. The demand for money as a cushion against unexpected contingencies is called precautionary motive.
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