If interest rates increase in financial markets, then... Group of answer choices Eli’s trucking company is likely to borrow more money than planned, which would increase the supply of money Guido Pizzeria is likely to borrow less money to renovate and the quantity supplied increases. Omar is likely to deposit more money in his savings account and the quantity supplied increases. Kim is likely to save less, which would increase the supply of money

If interest rates increase in financial markets, then... Group of answer choices Eli’s trucking company is likely to borrow more money than planned, which would increase the supply of money Guido Pizzeria is likely to borrow less money to renovate and the quantity supplied increases. Omar is likely to deposit more money in his savings account and the quantity supplied increases. Kim is likely to save less, which would increase the supply of money

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 2WNG

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Suppose an increase in demand in the market for mutual funds (a financial capital market) causes the interest rate to increase from 2% to 4%. How will this increase in demand affect supply and quantity supplied?
When the demand for money is greater than the supply of money: A) people offering to sell nonmonetary financial assets must increase the interest rate these assets pay in order to sell them. B) more people will hold money. C) the opportunity cost of holding money will fall. D) interest rates will fall.
Which of the following is not a characteristic of financial markets? a.Money is exchanged in financial markets. b.Borrowers represent the demand, or buying side of financial markets. c.Savers represent the supply, or selling side of financial markets. d.Interest or some other return on investment is the “price” in financial markets.
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Consider an economy in which there is one consumer born at the start of each time period. Each consumer lives for two periods and receives an endowment of 1 unit of the consumption good when young. At the start of the economy there is a consumer who is already old. This consumer owns one unit of money but has no endowment of the consumption good. Money has no intrinsic value. a. Can money be valuable in a finite economy (one that has a known end point)? b. Can money be valuable in an infinite economy? c. Can money allow exigency to be attained?
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