In the monetary flow of the economy, low income leads to few transactions, which means little money circulating and a lot of money stored, and so a lot of demand for liquidity and high interest rate. Select one: True False

Due to the huge inflow of money to Spain, price levels have begun to increase. The government worries that this huge money supply will be an economic problem soon. Which of these monetary policies will work to solve this problem? a. Increase cash reserve ratio, increase interest rates and buy government bonds b. Decrease cash reserve ratio, decrease interest rates and sell government bonds c. Decrease cash reserve ratio, increase interest rates and sell government bonds d. Increase cash reserve ratio, increase interest rates and sell government bonds

Stephanie deposits $500,000 in Bank of America. Assuming that banks lend out everything that they are legally allowed to lend, assume the reserve requirement is 14%, and the interest rate is 2%. How much money is created by the banking system based on this deposit alone?

Suppose the households keep some cash aside in banks to use in case of emergencies. Which function of money is fulfilled in this scenario? It has an intrinsic value. It acts as a medium of exchange. It avoids the problem of double coincidence of wants. It acts as a store of value. It acts as a unit of account.

The Bank of Canada sets the reserve requirement, which banks must meet through deposits at the Bank of Canada and cash held at the bank. What do these requirements achieve? Check all that apply. They help to facilitate transfers of funds between banks when a customer from one bank writes a cheque to a customer of another. They help to control the money supply. They help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash. They mean that a bank must have one dollar of deposits for every dollar it lends.

Suppose gdp growth rate is 6%, velocity is constant, money growth rate is 14%. if the inflation rate is 5%, what is the real interest rate?

"People are poor because they don't have very much money. Yet, central bankers keep money scarce. If people had more money, poverty could be eliminated." Evaluate this view. Do you think it reflects sound economics?

Differentiate between the real flow and money flow

The Federal Deposit Insurance Corporation is at least partly to credit for which of the following? A) Lower taxes and government spending B) Increased interest rates for savers C) Increased interest rates for borrowers D) Reduced bank runs

The Central Bank can reduce inflation and stimulate growth simultaneously by lowering interest rates.  Select one: True False