Nominal demand for money and benefit of holding money

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1. A benefit of holding money (cash) is ____, while the opportunity cost of holding money is ____.

1) Its usefulness as a store of value; lost output

2) The nominal interest rate; the fee charged to obtain money

3) Its usefulness as a store of value; the nominal interest rate

4) Its usefulness in carrying out transactions; consumption expenditure

5) Its usefulness in carrying out transactions; the shoe-leather cost

2. The nominal demand for money is ____.

1) Limited by the amount of currency printed by the Treasury

2) Unlimited, since people want as much money as possible

3) Limited by the supply of money as determined by the Fed

4) Generally higher when the nominal interest rate declines

5) Generally higher when real income declines

3. The aggregate demand curve will shift to the left EXCEPT when ____.

1) Autonomous tax increases

2) Autonomous consumption decreases

3) The velocity of money decreases

4) The money supply decreases

5) The price level increases

4. A possible SHORT-RUN effect of a one-time only decrease in the money supply is ____.

1) An increase in the natural unemployment rate

2) A decrease in the natural unemployment rate

3) A decline in potential output

4) An expansionary gap

5) An increase in the cyclical unemployment rate

Reference no: EM13685503

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