Question 6 How does an increase in interest rates affect the opportunity cost of holding money and the repayment to creditors? O Opportunity cost of holding money | Repayment to creditors Increase Increase Opportunity cost of holding money | Repayment to creditors Remain unaffected increase Opportunity cost of holding money | Repayment to creditors Decrease Remain unaffected Opportunity cost of holding money Repayment to creditors Increase Remain unaffected Opportunity cost of holding money Repayment to creditors Decrease Increase Question 7 Nominal MS2 MS1 interest rate -MD Quantity of money Which of the following is a reason for the shift in the money market as represented in the graph? O Sale of government bonds in an open-market operation Decrease in the required reserve ratio Decrease in the expected inflation Increase in the monetary base Increase in the expected return on bonds\fQuestion 10 The Fed decides to increase the money supply by $500 million in the economy by decreasing the discount rate to 4%. Which of the following is true about the nominal interest rate in the economy? O The nominal interest rate remains unaffected The nominal interest rate will increase by the percentage change in the discount rate. The nominal interest rate will fall. The nominal interest rate will fall to create surplus in the money market. The nominal interest rate will rise by the percentage change in the discount rate. Question 11 Which of the following situations would cause real interest rates to increase in the loanable funds market? Business investment being less than national savings OSupply exceeding demand OLending exceeding borrowing O Quantity supplied exceeding quantity demanded O Quantity demanded exceeding quantity supplied Question 12 A bank is currently giving out loans at an interest rate of 17% for an expected inflation rate of 3%. What is the current real interest rate in the economy? O 20% Q 14% 05% 17% 3%