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Quiz 4 M&B
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Answer Key
Testname: QUIZ5.TST
1) The classical economists believed that if the quantity of money doubled,
A) prices would fall.
B) output would double.
C) prices would remain constant.
D) prices would double.
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2)
3)
4)
5)
6)
2) According to the quantity theory of money demand,
A) a decrease in interest rates will cause the demand for money to increase.
B) an increase in interest rates will cause the demand for money to fall.
D
C
C
D
B
A
C) interest rates have no effect on the demand for money.
D) both A and B of the above are correct.
3) The Keynesian theory of money demand emphasizes the importance of
A) irrational behavior on the part of some economic agents.
B) a constant velocity.
C) interest rates on the demand for money.
D) all of the above.
4) Friedman's argument that competition among banks will tend to keep the difference between the return on
bonds and money relatively constant implies that
A) changes in income will have little effect on the demand for money.
B) changes in income will have a big impact on the demand for money.
C) changes in interest rates will have a big impact on the demand for money.
D) changes in interest rates will have little effect on the demand for money.
5) The aggregate demand curve is
A) the total quantity of an economy's intermediate goods demanded at a particular price level.
B) the total quantity of an economy's final goods and services demanded at different price levels.
C) the total quantity of an economy's final goods and services demanded at a particular price level.
D) the total quantity of an economy's intermediate goods demanded at all price levels.
E) none of the above.
6) According to monetarists, a decline in the money supply, holding other factors constant, shifts the aggregate
_____ curve to the _____.
A) demand; left
B) demand; right
C) supply; left
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D) supply; right
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