46- The velocity of money is: a. the purchasing power of money. b. the value of

ID: 1221919 • Letter: 4

Question

46- The velocity of money is:

a. the purchasing power of money.

b. the value of a dollar in relation to foreign currency.

c. the average number of times each dollar is spent on final goods and services in a given year.

d. the average length of time it takes for a dollar of income to be spent.

e. the total amount of money that is in circulation for consumption spending.

47- The interest rate that banks pay for borrowing overnight from other banks is called:

a. bank rate.

b. target rate.

c. federal funds rate.

d. real interest rate.

e. prime lending rate.

48- Which of the following actions of the Fed will increase money supply in the U.S. directly?

a. Purchase U.S. government bonds

b. Increase the federal funds rate

c. Increase the reserve requirement

d. Increase the discount rate

e. Ban sales of private mutual funds

49- For a bank to have lending power, its required reserves must:

a. be smaller than its legal reserves.

b. exceed its legal reserves.

c. be smaller than its excess reserves.

d. exceed its excess reserves.

e. exceed its vault cash.

50-If interest rates decrease:

a. the quantity of money demanded will not change.

b. the money demand function will shift to the right.

c. the quantity of money demanded will decrease.

d. the money demand function will shift to the left.

e. the quantity of money demanded will increase.

46 c. the average number of times each dollar is spent on final goods and services in a given year.

47 c. federal funds rate.

48 a. Purchase U.S. government bonds

49 c. be smaller than its excess reserves.

50 d. the money demand function will shift to the left.

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