Which of the following factors may cause velocity to fluctuate?
I. changes in interest rates
II. changes in expectations about inflation
III. changes in expectations about bond prices
IV. an increase in the number of financial products that affects the demand for money
A) I, II, III, and IV
B) I, II, and III
C) I, III, and IV
D) I and II
Ans: A) I, II, III, and IV
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Banks use repurchase agreements to
A) ensure that payments on consumer loans are made on time. B) borrow funds from business firms or other banks. C) guard against price fluctuations on long-term bonds. D) ensure that they always have enough funds on hand to meet their federal tax liabilities.
Which of the following is an example of monetary policy?
a. Regulating financial capital markets b. Decreasing the tax rate c. Increasing the amount of government spending d. Regulating factors of production
The most prominent classical economist was
A. Karl Marx. B. Adam Smith. C. John Maynard Keynes. D. Milton Friedman.
The flatter is the IS curve,
A) the more effective is monetary policy. B) the less effective is monetary policy. C) the effectiveness of monetary policy does not change. D) a given change in the money supply will have a smaller effect on output.