6. The speculatlve demand for money ls a function of a. consumer incomes. b. the

Question

6. The speculatlve demand for money ls a function of a. consumer incomes. b. the current interest rate. c producer expectations about consumer demand d. expected emergencies by consumers e. all of the above. 7. The transactions demand for money is a function of: a. consumer incomes b. the current interest rate. c. the current inflation rate. d. the current unemployment rate. e. none of the above. 8. The most frequently used tool by the Fed to control the money supply is: a. moral suasion b. the reserve requirement c the buying and selling of bonds d. federal funds discount rate e. the use of margin requirements on stock purchases

Explanation / Answer

6. Option b.

Speculative demand is inversely related to interest rate,when interest rate falls, the bond price will rise and vice versa.

7. Option b.

Transaction demand not only depends on interest rate, but it also depends on aggregate Income and price level.

8. Option b.

The Reserve requirement is the money that banks keep with them overnight.

The fed pays interest on the required Reserves and any Excess Reserves.

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