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Questions and Answers
An increase in the money supply decreases the interest rate in the short run.
An increase in the money supply decreases the interest rate in the short run.
- It depends on the money demand
- Only if the economy is in a recession
- True (correct)
- False
An increase in interest rates implies a higher opportunity cost of holding money.
An increase in interest rates implies a higher opportunity cost of holding money.
- False
- True (correct)
- It depends on the inflation rate
- Not necessarily, it depends on the money demand
Credit cards are a medium of exchange.
Credit cards are a medium of exchange.
- False
- Only for online transactions
- True (correct)
- They are a store of value
The money multiplier equals 1/(1 - R), where R represents the reserve ratio.
The money multiplier equals 1/(1 - R), where R represents the reserve ratio.
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M1 is a more liquid measure of money supply than M2.
M1 is a more liquid measure of money supply than M2.
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