Chapter15: Monetary Theory And Policy
Section: Chapter Questions
Problem 3.7P
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A) What is the notable insight of the Quantity Theory of money?
(a) An Increase in the quantity of money, ceteris paribus will result in inflation
(b) A decrease in the quantity of money, ceteris paribus will result in inflation
(c) An Increase in the quantity of goods and services, ceteris paribus will result in inflation
(d) An Increase in the demand for money holding, ceteris paribus will result in inflation
B) What is the primary purpose of the interest rate in Bagehot's rule?
(a) To increase the revenue of the government
(b) To decrease uncertainity
(c) To eliminate moral hazard
(d) To increase the revenue of the central bank
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