A) $120 59. Refer to the above information. If nominal GDP is $200 and the interest rate is 6 percent, the total amount of money that households and businesses will want to hold is: B) $140 C) $160 D) $180 Use the following to answer questions 60-62: Answer the next question(s) on the basis of the following table in which columns (1) and (2) (Da) for money: indicate the transactions demand (D() for money and columns (1) and (3) show the asset demand (1) (2 ) Interest rate (3) D. Da 12% $100 $. 0 10 100 20 8 100 40 100 60 100 80 100 100 60. Refer to the above data. If the money supply is $160, the equilibrium interest rate will be: A) 10 percent. B ) 8 percent. C) 6 percent. D) 4 percent. 61. The above data suggest that the amount of money that society wishes to hold as an asset: A) varies directly with the interest rate. B) varies inversely with the interest rate. C) varies inversely with nominal GDP. D) is independent of the interest rate. 62. The above data suggest that the amount of money demanded for transactions: A) varies directly with the interest rate. B ) varies inversely with the interest rate. C) varies inversely with nominal GDP. D) is independent of the interest rate. Page 16 INTY COLLEGEUse the following to answer questions 63-68: 0- Rate of interest (percent) + Rate of interest (percent) Rate of interest (percent) D , 100 200 300400 100 200 300400 Amount of money demanded Amount of money demanded 100 200 300400 500 600 (billions of dollars Amount of money demanded (billions of dollars) and supplied (billions of dollars) 63. Refer to the above money market diagrams. If the Federal Reserve increased the stock of money, the: A) S curve would shift leftward and the equilibrium interest rate would rise. B) S curve would shift rightward and the equilibrium interest rate would fall. C) D3 would shift leftward and the equilibrium interest rate would fall. D) D3 curve would shift leftward and the equilibrium interest rate would rise. 64. Refer to the above money market diagrams. If the interest rate was at 8 percent, people would: A) sell bonds, which would cause bond prices to fall and the interest rate to fall. B) buy bonds, which would cause bond prices to rise and the interest rate to fall. C) have insufficient liquidity, which would cause them to reduce their spending on consumer goods. D) buy bonds, which would cause bond prices to fall and the interest rate to rise. 65. Refer to the above money market diagrams. If each dollar held for transactions is spent four times per year on the average, we can infer that the: A) real GDP is $800. B) nominal GDP is $800. C ) money supply must be $800. nominal GDP is $1200. 66. Refer to the above money market diagrams. The total demand for money is shown by: A) DI. B) D2. C) D3. D) S. Page 17 COPIED AT CAMDEN COUNTY COLLEGE67. Refer to the above money market diagrams. Curve Di represents the: A) speculative demand for money. B) transactions demand for money. C) asset demand for money. D) stock of money. A) D1. 68. Refer to the above money market diagrams. The asset demand for money is shown by: B) D 2. C) D3. D) S. Use the following to answer questions 69-70: Answer the next question(s) on the basis of the following information for a bond having no expiration date: bond price = $1000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent. 69. Refer to the above information. If the price of this bond increases to $1250, the interest rate will: A) fall to 9 percent. B) fall to 8 percent. C) rise to 1 1 percent. D) rise to 12 percent. 70. Refer to the above information. If the price of this bond falls by $200, the interest rate will: A) rise by 2.5 percentage points. B) rise by 5 percentage points. C) fall by 2.5 percentage points. D) fall by 5 percentage points. Page 18 COPIED AT CAMDEN COUNTY COLLEGEUse the following to answer questions 71-74: Sm Interest rate -" N W Dm 0 Q Quantity of money 71. Refer to the above diagram of the money market. Given Dm and Sm, an interest rate of is is not sustainable because the: A) supply of bonds in the bond market will decline and the interest rate will rise. B) supply of bonds in the bond market will increase and the interest rate will decline. C) demand for bonds in the bond market will decline and the interest rate will rise D) demand for bonds in the bond market will rise and the interest rate will fall. 72. Refer to the above diagram of the money market. The equilibrium interest rate is: A) i1. B) 12 . 16 C) 13 . D) not determinable without additional information. 73. Refer to the above diagram of the money market. The vertical money supply curve Sm reflects the fact that: A) bond prices and interest rates are inversely related. B) the stock of money is determined by the Federal Reserve System and does not change when the interest rate changes. C) the velocity of money is zero. D) lower interest rates result in lower opportunity costs of supplying money. 74. Refer to the above diagram of the money market. The downward slope of the money demand curve Dm is best explained in terms of the: A) transactions demand for money. B) direct or positive relationship between bond prices and interest rates. C) asset demand for money. D) wealth or real-balances effect. Page 19 WANTED AT DATINGLI SAIDITU DAL LERE