Question 8 (1 point) One determinant of money demand that Friedman considers but

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Question 8 (1 point)

One determinant of money demand that Friedman considers but Keynes does not is

Question 8 options:

output.

the return on stocks.

the unemployment rate.

none of the above.

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Question 9 (1 point)

The primary disadvantage of the gold standard is that

Question 9 options:

international capital flows are restricted.

the supply of gold has little connection to economic conditions.

exchange rates are volatile.

none of the above.

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Question 10 (1 point)

According to Friedman, an increase in expected inflation causes the demand for money to _____, ceteris paribus.

Question 10 options:

increase

decrease

stay the same

cannot be determined

Under a dirty float, a country must sell international reserves when its exchange rate (in terms of a foreign currency) reaches its

Question 11 options:

maximum.

minimum.

both of the above.

neither of the above.

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Question 12 (1 point)

In Keynes's model, a(n) _____ in interest rates can decrease the _____ demand for money.

Question 12 options:

increase, transactions

decrease, transactions

increase, speculative

decrease, speculative

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Question 13 (1 point)

Some developing countries adopted a managed float instead of a free float because

Question 13 options:

a managed float does not require that they hold foreign reserves.

exchange rates are less volatile under a managed float.

there are restrictions on capital mobility under a free float.

none of the above.

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Question 14 (1 point)

If a central bank does not have full control of the supply of money, supply is ____ on a graph of the supply and demand for money.

Question 14 options:

upward sloping

downward sloping

vertical

horizontal

output.

the return on stocks.

the unemployment rate.

none of the above.

Explanation / Answer

Q8. the unemployment rate

Q9. international capital flows are restricted.

Q.10 decrease (If inflation expectations increase, but the return on money doesn’t, people will want to hold less money, ceteris paribus, because the relative return on goods (land, gold, turnips) will increase.)

Q.11. maximum (When a currency is overvalued the central bank must soak up domestic currency by selling international reserves)

Q.12 increase, transactions

Q.13 exchange rates are less volatile under a managed float.

Q.14 downward sloping

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