Question

1 A great uncle you did not know existed leaves you $100,000 in his will. Keynes would predict that the transactions demand for money will increase.

Select one:

True

False

2. Strictly speaking, the supply of money increases with interest rates, since banks lend more at higher rates.

Select one:

True

False

3. During the first century of the United States' existence, its predominant exchange rate regime was a

Select one:

a. specie standard.

b. managed exchange rate.

c. free float.

d. none of the above.

4. According to Friedman's model, an increase in the yield on bonds increases the demand for money, ceteris paribus.

Select one:

True

False

Answer 1

Answer-1—true

The transaction demand for money means that people kept liquid money for the day to day expenditure. The people hold more money then the transaction demand for money will increase.

Answer—2—False

If the supply of money increases then the rate of interest will lower, and the bank can lend more money with less interest rate.

Answer—3—Specie standard

The specie standard means that the value of metal contained in the two currencies.

Answer—4—false

The supply of money would lead to an increase in the yield of bonds.