Question 1

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. The money demand curve will shift from  to  if

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 2

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point A to Point D can be caused by

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 3

As the interest rate falls, people hold ________ money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has ________.

Accepted Answer

When the interest rate falls, the opportunity cost of holding money (i.e., the foregone interest earnings from not keeping money in an interest-bearing account) decreases, making it more attractive for people to hold money in non-interest-bearing checking accounts.

Question 4

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point B to Point A can be caused by

Accepted Answer

A movement from Point B to Point A represents an increase in aggregate demand, which can be caused by an increase in the interest rate. This would shift the AD curve to the right, resulting in a higher output level (Y) and a higher price level (P). A decrease in nominal income (A), or an increase in the price level (B) or a decrease in the interest rate (C) would not cause this movement.

Question 5

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow.  Figure 25.2
-Refer to Figure 25.2. Suppose the money demand is currently at Point D. A movement to point C could be caused by

Accepted Answer

A movement from Point D to Point C on a money demand curve typically indicates a decrease in nominal income, which reduces the demand for money at any given interest rate.

Question 6

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow.  Figure 25.2
-Refer to Figure 25.2. An increase in nominal income could be represented by a movement from Point ________ to Point ________.

Accepted Answer

An increase in nominal income would shift the aggregate expenditure curve to the right, from point A to point B.

Question 7

Which of the following will most likely cause a decrease in the quantity of money demanded?

Accepted Answer

An increase in the interest rate will make it more expensive to borrow money, which will decrease the quantity of money demanded.

Question 8

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow.  Figure 25.2
-Refer to Figure 25.2. Suppose money demand is currently at Point A. A decrease in the interest rate to 5%, ceteris paribus, will likely

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 9

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. The movement from C to B could be cause by

Accepted Answer

A decrease in the interest rate would cause an increase in investment and consumption, leading to an increase in aggregate demand and a shift from point C to point B on the AD curve.

Question 10

The Fed is a nonprofit institution whose function is to serve the overall welfare of the public.

Accepted Answer

The Federal Reserve was created by Congress to serve as the central bank of the United States and is a nonprofit institution that exists to serve the public interest.

Question 11

The Fed is also known as a "banker's bank."

Accepted Answer

The Fed acts as a central bank and provides banking services to other banks, including holding their deposits and lending to them in times of need. Therefore, it is also known as a "banker's bank."

Question 12

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point B to Point D can be caused by

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 13

If interest rates increase to a very high level, people will most likely hold

Accepted Answer

When interest rates increase to a very high level, people are incentivized to save more money in savings accounts to earn higher interest, rather than holding onto cash which does not earn interest.

Question 14

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow.  Figure 25.2
-Refer to Figure 25.2. Suppose money demand is currently at Point A. An increase money demand could be caused by

Accepted Answer

According to Figure 25.2, an increase in nominal income will shift the money demand curve to the right from MD1 to MD2, resulting in a new equilibrium point at Point B with a higher interest rate and a higher quantity of money demanded. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because they would result in a movement along the same money demand curve rather than a shift of the curve.

Question 15

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. The money demand curve will shift from  to  if

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 16

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow.  Figure 25.2
-Refer to Figure 25.2. Suppose that money demand is currently at Point B. A movement to Point D could be caused by

Accepted Answer

According to the diagram, a movement from Point B to Point D indicates a decrease in money demand, which could be caused by a decrease in the interest rate, ceteris paribus.

Question 17

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point D to Point E can be caused by

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 18

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point D to Point A can be caused by

Accepted Answer

The movement from Point D to Point A indicates a decrease in both price level and output level. This could be caused by a decrease in nominal income, as consumers would have less money to spend and demand for goods and services would decrease. A decrease in interest rates could stimulate spending and increase demand, leading to an increase in output level and a movement in the opposite direction (from A to D). Therefore, choice C is the best option.

Question 19

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow.  Figure 25.1
-Refer to Figure 25.1. A movement from Point A to Point C can be caused by

Accepted Answer

The answer of Refer to the information provided in Figure...

Question 20

The central function of the Fed is to help manage the macroeconomy by setting the interest rate.

Accepted Answer

The Federal Reserve, or the Fed, sets monetary policy by adjusting the federal funds rate, which is the interest rate at which banks lend to each other overnight. This rate affects other interest rates in the economy, such as those for mortgages and car loans, and can have a significant impact on economic growth and inflation. Therefore, managing the macroeconomy through interest rate policy is a central function of the Fed.

Quiz 25: Money, the Federal Reserve, and the Interest Rate

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The money demand curve will shift from to if

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point A to Point D can be caused by

As the interest rate falls, people hold money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has .

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point B to Point A can be caused by

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose the money demand is currently at Point D. A movement to point C could be caused by

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. An increase in nominal income could be represented by a movement from Point to Point .

Which of the following will most likely cause a decrease in the quantity of money demanded?

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose money demand is currently at Point A. A decrease in the interest rate to 5%, ceteris paribus, will likely

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The movement from C to B could be cause by

The Fed is a nonprofit institution whose function is to serve the overall welfare of the public.

The Fed is also known as a "banker's bank."

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point B to Point D can be caused by

If interest rates increase to a very high level, people will most likely hold

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose money demand is currently at Point A. An increase money demand could be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The money demand curve will shift from to if

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose that money demand is currently at Point B. A movement to Point D could be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point D to Point E can be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point D to Point A can be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point A to Point C can be caused by

The central function of the Fed is to help manage the macroeconomy by setting the interest rate.

Quiz 25: Money, the Federal Reserve, and the Interest Rate

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The money demand curve will shift from to if

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point A to Point D can be caused by

As the interest rate falls, people hold ________ money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has ________.

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point B to Point A can be caused by

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose the money demand is currently at Point D. A movement to point C could be caused by

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. An increase in nominal income could be represented by a movement from Point ________ to Point ________.

Which of the following will most likely cause a decrease in the quantity of money demanded?

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose money demand is currently at Point A. A decrease in the interest rate to 5%, ceteris paribus, will likely

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The movement from C to B could be cause by

The Fed is a nonprofit institution whose function is to serve the overall welfare of the public.

The Fed is also known as a "banker's bank."

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point B to Point D can be caused by

If interest rates increase to a very high level, people will most likely hold

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose money demand is currently at Point A. An increase money demand could be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. The money demand curve will shift from to if

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. Suppose that money demand is currently at Point B. A movement to Point D could be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point D to Point E can be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point D to Point A can be caused by

Refer to the information provided in Figure 25.1 below to answer the question(s) that follow. Figure 25.1 -Refer to Figure 25.1. A movement from Point A to Point C can be caused by

The central function of the Fed is to help manage the macroeconomy by setting the interest rate.

As the interest rate falls, people hold money in non-interest-bearing checking accounts instead of savings accounts because the opportunity cost of holding money has .

Refer to the information provided in Figure 25.2 below to answer the question(s) that follow. Figure 25.2 -Refer to Figure 25.2. An increase in nominal income could be represented by a movement from Point to Point .