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Questions and Answers
What effect predicts an increase in the money supply leads to a rise in interest rates in response to the rise in the price level?
What effect predicts an increase in the money supply leads to a rise in interest rates in response to the rise in the price level?
- Fisher effect
- Price-Level effect (correct)
- Wealth effect
- Expected-Inflation effect
Why does the Expected-Inflation effect show an increase in interest rates in response to an increase in the money supply?
Why does the Expected-Inflation effect show an increase in interest rates in response to an increase in the money supply?
- Because it leads people to expect a lower price level in the future
- Because it has no impact on interest rates
- Because it shifts the demand curve to the right (correct)
- Because it shifts the demand curve to the left
What is the source of the data on Money Growth and Interest Rates from 1950-2017?
What is the source of the data on Money Growth and Interest Rates from 1950-2017?
- World Bank
- International Monetary Fund (IMF)
- Federal Reserve Bank of St. Louis FRED database (correct)
- Federal Deposit Insurance Corporation (FDIC)
According to the liquidity preference framework, what effect does an increase in the money supply have on interest rates?
According to the liquidity preference framework, what effect does an increase in the money supply have on interest rates?
What is the long-term impact of a one-time increase in the money supply on prices according to the text?
What is the long-term impact of a one-time increase in the money supply on prices according to the text?
How does a rising price level impact interest rates according to the text?
How does a rising price level impact interest rates according to the text?
What conclusion does the income effect draw about the impact of an increase in the money supply on interest rates?
What conclusion does the income effect draw about the impact of an increase in the money supply on interest rates?
In the liquidity preference framework, what determines the equilibrium interest rate?
In the liquidity preference framework, what determines the equilibrium interest rate?
According to the Keynesian model in the liquidity preference framework, what are the two main categories of assets people use to store their wealth?
According to the Keynesian model in the liquidity preference framework, what are the two main categories of assets people use to store their wealth?
What does the equation Bs - Bd = Ms - Md represent in the liquidity preference framework?
What does the equation Bs - Bd = Ms - Md represent in the liquidity preference framework?
How is expected inflation calculated according to Frederic S. Mishkin's procedure as outlined in the text?
How is expected inflation calculated according to Frederic S. Mishkin's procedure as outlined in the text?
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