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ECO 4223 EXAM 3 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO 4223 EXAM 3 QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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ECO 4223 EXAM 3 QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
The quantity theory of money is a theory of how:
a. the money supply is determined
b. the real value of aggregate income is determined
c. interest rates are determined
d. the nominal value of aggregate income is determined - ANSWER the nominal value of aggregate
income is determined
The average number of times that a dollar is spent in buying the total amount of final goods and services
produced during a given time period is known as:
a. velocity
b. spending multiplier
c. gross national product
d. the money multiplier - ANSWER velocity
If the money supply is $500 and nominal income is $3,000 the velocity of money is:
a. 1/60
b. 60
c. 1/6
d. 6 - ANSWER 6
The equation of exchange states that the quantity of money multiplied by the number of times this
money is spent in a given year must equal:
a. velocity
b. real income
c. nominal income
d. real gross national product - ANSWER nominal income
, Fisher's quantity theory of money suggests that the demand for money is purely a function of ______,
and _________ not effect on the demand for money.
a. government spending, interest rates have
b. income, interest rates have
c. interest rates, income has
d. expectations, income has - ANSWER income, interest rates have
Keynes hypothesized that the transactions component of money demand was primarily determined by
the level of:
a. income
b. velocity
c. stock market values
d. interest rates - ANSWER income
Keynes argues that the transactions component of the demand for money was primarily determined by
the level of people's _______, which he believed were proportional to ______.
a. incomes, age
b. transactions, age
c. incomes; wealth
d. transactions, income - ANSWER transactions, income
Of the three motives for holding money suggested by Keynes, which did he believe to be the most
sensitive to interest rates?
a. transactions motive
b. precautionary motive
c. speculative motive
d. altruistic motive - ANSWER speculative
If people expect nominal interest rates to be higher in the future, the expected return to bonds
_______________, and the demand for money ________________.
a. rises; increases
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