When a consumer withdraws $200 from her savings account and deposits When a consumer withdraws $200 from her savings ac | Page 2

rates to 7%
What must be the level of the nominal money supply in this
economy? 12
4
8
6 Flag this Question Question 61 pts If there is a financial panic and
increased uncertainty about the returns in the stock market and bond
market, what is the likely effect on money demand The overall effect
is ambiguous
Money demand declines
Money demand declines first, then rises when inflation increases
Money demand rises Flag this Question Question 71 pts If the
quantity of money demanded exceeds the quantity of money supplied,
then the quantity of nonmonetary assets demanded exceeds the
quantity supplied
the quantity of nonmonetary assets supplied exceeds the quantity
demanded
the quantity of nonmonetary assets demanded will still equal the
quantity supplied, all else
being equal
you can make no conclusions about the relative supply and demand of
nonmonetary assets Flag this Question Question 81 pts The velocity
of M1 is usually higher than the velocity of M2, except in very severe
recessions.
the reciprocal of the velocity of M2.
is always lower than the velocity of M2. usually higher than the
velocity of M2. Flag this Question Question 91 pts
Suppose velocity is 3, real output is 9000, and the price level is 1.5.
What is the level of real money demand in this economy? 30,000
3000
6000
2000 Flag this Question Question 101 pts
Suppose the interest rate on a oneyear bond today is 6% per year, the
interest rate on a oneyear bond one year from now is expected to be
4% per year, and the interest rate on a oneyear bond two
years from now is expected to be 3% per year. Assuming risk neutral
investors, what is the interest rate today on a twoyear bond? 6%