The Money Market

Multiple Choice

Which of the following changes will necessarily occur as a result of an increase in the nominal interest rate?

• • The money demand curve will shift to the left.

• • The money demand curve will shift to the right.

• • The money supply curve will shift to the left.

• • The quantity of money supplied will decrease.

• The quantity of money demanded will decrease.

Multiple Choice

The amount of money that the public wants to hold is $10 billion. With a monetary base of $2 billion and a money multiplier of 4, which of the following will most likely occur?

• The monetary base will increase.

• The nominal interest rate will increase.

• The money multiplier will increase.

• The money demand curve will shift right.

• Spending will increase.

Multiple Choice

An increase in the equilibrium nominal interest rate could be caused by which of the following changes?

• An increase in the monetary base

• An increase in the money supply

• An increase in real income

• A decrease in the amount of cash the public wants to hold

• A decrease in the price level