If interest rates go up, the result will be a temporary

surplus of money in the money market

If interest rates go down, the result will be a temporary

shortage of money in the money market

the crowding out effects occurs because

money demand shifts right as government spending increases

With targeted interest rates, the central bank?

adjust the money supply until the targeted interest rate is achived

The money demand curve is downward slopping because?

the inverse relationship between interest rates and holding money to spend

If the central bank increases the money supply the effect on money market diagram is?

shift of the money supply curve to the right

Increasing the money supply by the central bank will likley lead to an

An increase in the aggregate demand of the economy

Increasing the money supply will likely lead to an decrease in interest rates which could increase

comsumption and investment spending

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The Money Market & Interest Rates

14 termsStudBud Administration93 plays

IB Economics

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Questions 14

Answers

1
If interest rates go up, the result will be a temporary
surplus of money in the money market
shift of the supply of money in the money market
shift of the demand for money in the money market
shortage of money in the money market
2
The rate of interest can be thought of as the 'price' of money services.
True
False
3
If interest rates go down, the result will be a temporary
shift of the demand of money in the money market
shift of the supply of money in the money market
shortage of money in the money market
surplus of money in the money market
4
the crowding out effects occurs because
money demand shifts left as government spending increases
money demand shifts left as government spending decrease
money demand shifts right as government spending increases
money demand shifts right as government spending decrease
5
The supply of money in an economy is controlled by the?
central bank
commerical banks
consumers demand
central government
6
Decreasing the money supply by the central bank is considered expansionary monetary policy
False
True
7
With targeted interest rates, the central bank?
sets the interest rate
adjust the money supply until the targeted interest rate is achived
adjust the money demand until the targeted interest rate is achived
sets a price floor of interest rates
8
The money demand curve is downward slopping because?
the direct relationship between interest rates and holding money to spend
the direct relationship between saving and holding money to spend
the inverse relationship between interest rates and holding money to spend
the inverse relationship between interest rates and mortgage rates
9
If the central bank increases the money supply the effect on money market diagram is?
movement down along the money demand curve
shift of the money supply curve to the left
movement up along the money demand curve
shift of the money supply curve to the right
10
Monetary policy impacts indirectly on aggregate demand through __________.
government spending
transfer payments
the spending multiplier effect
interest rates
11
In the United States the central bank targets interest rates with this rate
the federal funds rate
the base rate
the prime lending rate
the discount rate
12
Increasing the money supply by the central bank will likley lead to an
An increase in the aggregate demand of the economy
An decrease in the aggregate supply of the economy
An increase in the aggregate supply of the economy
An decrease in the aggregate demand of the economy
13
Monetary policy effects the money supply and fiscal policy effects the money demand.
False
True
14
Increasing the money supply will likely lead to an decrease in interest rates which could increase
government spending and export revenue
comsumption and investment spending
the budget deficit
unemployment

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