The transaction demand for money depends on all of the following EXCEPT

Income

The price level

The interest rate

The amount of transaction spending

Sally's income is $2000 a month. She deposits $500 in a savings account, buys $200 worth of government securities, and leaves the rest for daily transactions. Sally's money demand is

$ 2000

$1300

$700

$1500

Which of the following is NOT a motive for holding money?

The transaction motive

The asset motive

The speculative motive

All of the above

The speculative demand for money

increase when income increases above normal

decreases when interest rates decrease below normal

increases when interest rates decrease below normal

decreases when the price level decreases below normal

A decrease in the reserve requirement ratio will

Increase the money supply

Decrease the money supply

Will not change the money supply

Will decrease the discount rate

The discount rate is

The interest rate commercial banks charge each other for borrowing funds

The interest rate commercial banks charge their new customers

The interest rate the Fed charges commercial banks for borrowing funds D) None of the above

None of the above

Suppose the equilibrium interest rate is 5%, and market forces pushes up the interest rate to 6%, what is likely to happen in the money market?

Shortage of money and the interest rate will fall

Shortage of money and the interest rate will rise

Surplus of money and the interest rate will rise

Surplus of money and the interest rate will fall

Which of the following events will lead to an increase in the equilibrium interest rate?

A decrease in the discount rate

A decrease in the level of aggregate output

An increase in the required reserve ratio

An increase in the price level