50) The \"value of money A) is the quantity of goods and services that a unit of
ID: 1116232 • Letter: 5
Question
50) The "value of money A) is the quantity of goods and services that a unit of money can buy. B) is determined by Fed regulations C) increases during inflationary periods. D) increases during economic expansions. E) is directly related to the price level the quantity demanded, in the long run the value of 51) If the quantity of money supplied money A) exceeds; falls as people spend their surplus money B) exceeds; rises as people buy bonds C) is less than; falls as people spend their surplus money D) is less than; does not change unless the Fed increases the money supply E) equals; equals zero Value of money (100/P) 1.08 1.04 1.00 . 0.96 0.92 MS LRMD 0 0.5 1.0 1.5 20 25 Quantity of money (trillions of dollars) 52) In the figure above, in the long run what happens if the Fed increases the quantity of money by 5 percent? A) The value of money falls by 5 percent and there will be a movement down along the LRMD curve. B) The real interest rate falls and the LRMD curve shifts rightward. Q) The nominal interest rate rises by 5 percent. D) The price level rises by 5 percent and the LRMD shifts leftward. E) The value of money rises by 5 percent. 53) In the figure above, what happens if the Fed increases the quantity of money by 8 percent? A) The LRMD curve shifts rightward to restore equilibrium. B) The value of money falls to 0.92 and there is a movement downward along the LRMD C) The price level falls to 1.08. D) The interest rate rises to 1.08. E) The value of money rises to 1.08 10Explanation / Answer
Answer 50 - The value of money is the quantity of goods and services that a unit of money can buy. Value of money is depends on price level. Value of money increases as price level falls, vice versa.
Option A is the correct answer
Answer 51 - If quantity of money supplied ''exceeds'' quantity demanded, in the long run the value of money will fall, because people spend their surplus money.
Option A is the correct answer.
Answer 52 - Suppose Fed increases the quantity of money by 5 percent, then supply curve of money will shift rightward and real interest rate falls.
Option B is the correct answer.
Answer 53 - If fed increase money supply by 8 percent then money supply curve (MS) will shift to the rightward to restore equilibrium in the economy.
Option A is the correct answer.
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