TRUE/FALSE 1-When a market is in surplus, there is pressure for the price to mov
ID: 1221923 • Letter: T
Question
TRUE/FALSE
1-When a market is in surplus, there is pressure for the price to move upward.
2- Scarcity and durability characterize the property of money as a medium of exchange.
3- The higher the rate of inflation in Cuba, the greater the probability that Cuban residents will substitute U.S. currency for Cuban currency.
4- If Julia deposits $2,000 dollars (which she has until now kept in her closet as cash) in her savings account, then the M1 money supply will decrease.
5- In a market system, the distribution of income is determined by the ownership of resources.
6-According to the equation of exchange, a contractionary monetary policy must be adopted to offset any decrease in the velocity of money.
7- Inflation targeting usually increases the uncertainty about the course of action of central banks, as perceived by the general public.
8- The bank rate is the interest rate charged by the commercial banks to its borrowers.
9- Other things equal, when the Fed raises the reserve requirement, the banking system’s excess reserves will fall, the deposit expansion multiplier will decline, and the money supply will decrease.
10- There is an inverse relationship between the interest rate and the quantity of money demanded.
Explanation / Answer
1.
This is false.
Market surplus indicates excess supply of products or services than their demands. All the products could not be sold out because of higher prices. Producers then lower their prices to get the increasing demand. It means pressure for the price to move downward.
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