5 Questions
An increase in the money supply decreases the interest rate in the short run.
True
An increase in interest rates implies a higher opportunity cost of holding money.
True
If the Fed buys bonds in the open market, the money supply decreases.
False
The money multiplier equals 1/(1 - R), where R represents the reserve ratio.
True
Monetary policy becomes ineffective as interest rate reaches zero.
True
Test your knowledge with this problem set on macroeconomics. Determine whether statements regarding the wealth effect and the money supply are true or false. Sharpen your understanding of the aggregate demand curve and short-run interest rate changes.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
