"Because the nominal interest rate is the opportunity cost of holding money, the supply curve of money slopes downward." Is the previous statement correct or incorrect?
What will be an ideal response?
The statement is incorrect. Because the nominal interest rate is the opportunity cost of holding money, the demand for money curve slopes downward but the supply curve of money does not slope downward.
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If the dollar appreciates, American consumers will buy more foreign goods and services.
Answer the following statement true (T) or false (F)
Explain why purchasing power parity measures of income levels tend to show a smaller difference between poor and rich countries
What will be an ideal response?
M1 and M2 are
a. usually equal b. aggregates that, when added together, encompass all methods of payment c. nonofficial measures of the U.S. money supply d. both measures of the U.S. money supply e. the best way to measure the U.S. money supply
One reason a bank keeps vault cash is because it
a. may be required to provide cash to customers who are withdrawing their funds b. wants to earn more interest income c. wants to offer more loans d. may need to make transactions with other banks e. may need to pay more interest on its savings accounts