Exam (elaborations)
ECO 4223 Exam 3 solution 2024
- Course
- Institution
ECO 4223 Exam 3 solution 2024
[Show more]
Content preview
ECO 4223 Exam 3 solution 2024The 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 - ANS 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 - ANS 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 - ANS 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 - ANS 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 - ANS 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 - ANS 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 - ANS 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 - ANS 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
b. rises, decreases
c. falls, increases
d. falls, decreases - ANS falls, increases
Keynes argued that when interest rates were low relative to some normal value, people
would expect bond prices to _______ so the quantity of money demanded would.
a. decreases, decreases
b. increase, increase
c. increase, decrease
d. decrease, increase - ANS decrease, increase
In the Baumol-Tobin analysis of transactions demand for money, either an increase in
_________ or a decrease in ___________ increases money demand.
a. interest rates, brokerage fees
b. interest rate, income
c. brokerage fees; income
d. income; interest rate - ANS income; interest rate
Keynes reasoned that consumer expenditure is most closely related to
a. disposable income
b. the levels of interest rates
c. the marginal tax rate
d. the price level - ANS disposable income
If the consumption function is C = 20 + 0.8YD, then an increase in disposable income
by $100 will result in an increase in consumer expenditure by:
a. 100
b. $80
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller supremetutor. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $25.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now