#1
Which of the following factors does NOT typically affect money demand?
Interest rates
Income levels
Price levels
Government regulations
#2
According to the liquidity preference theory, what happens to money demand when interest rates rise?
Increases
Decreases
Remains constant
Becomes unpredictable
#3
Which of the following best describes the relationship between money demand and economic activity?
Positive relationship
Negative relationship
No relationship
Cyclical relationship
#4
According to Keynesian economics, what happens to money demand when income levels increase?
Increases
Decreases
Remains constant
Becomes unpredictable
#5
According to the Fisher effect, what happens to nominal interest rates when inflation increases?
Nominal interest rates decrease
Nominal interest rates increase
Nominal interest rates remain constant
Nominal interest rates become unpredictable
#6
Which of the following best describes the transaction motive for holding money?
Holding money to earn interest
Holding money to conduct day-to-day transactions
Holding money to hedge against inflation
Holding money to speculate on future changes in interest rates
#7
What is the primary function of money in an economy?
To act as a medium of exchange
To act as a store of value
To act as a unit of account
All of the above
#8
Which of the following is NOT a component of the money supply (M2) in the United States?
Currency
Checking deposits
Savings deposits
Corporate bonds
#9
Which of the following is NOT an assumption of the money demand curve in classical economics?
People hold money only for transactions purposes
Interest rates are the sole determinant of money demand
Income is constant
Price levels are constant
#10
In the context of money demand, what is the opportunity cost of holding money?
Interest earned from investments
The rate of inflation
The price level of goods and services
The purchasing power of money
#11
What is the primary function of the Federal Reserve in relation to money demand and interest rates?
To control inflation
To regulate the money supply
To set interest rates
To oversee government spending
#12
In the context of money demand, what does the term 'velocity of money' refer to?
The rate at which money supply changes
The speed at which money circulates in the economy
The stability of money value
The variability of interest rates
#13
According to the Baumol-Tobin model, what effect does an increase in transaction costs have on money demand?
Increases money demand
Decreases money demand
Has no effect on money demand
Causes money demand to fluctuate
#14
Which of the following best describes the precautionary demand for money?
The demand for money to facilitate day-to-day transactions
The demand for money to cover unexpected expenses
The demand for money to earn interest
The demand for money to hedge against inflation
#15
What is the relationship between money demand and the speculative motive according to the speculative demand for money?
Inverse relationship
Direct relationship
No relationship
Fluctuating relationship
#16
Which of the following theories suggests that people hold money because it is less risky than other assets?
Baumol-Tobin model
Liquidity preference theory
Keynesian liquidity trap theory
Classical quantity theory of money
#17
In the context of the speculative demand for money, what does 'expectations regarding future interest rates' refer to?
Current interest rates
Anticipated changes in inflation
Predictions about future monetary policy
Forecasts about future returns on investments
#18
Which of the following is an example of a transaction cost associated with holding money?
Interest forgone by not investing money
Fees charged by banks for account maintenance
Loss of purchasing power due to inflation
Uncertainty about future interest rate movements