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1. List and explain the three different types of money demand. 2.

Resolved Question:

1. List and explain the three different types of money demand.
2. How would the Fed's sale of government bonds on the open market affect the money supply?
3. Distinguish M1 from M2.
4. List and explain the three subgroups of the Federal Reserve system.

Please choose 3 questions below to answer.
1. "When real interest rates are high, so is the opportunity cost of funds." What does this statement mean?
2. Explain why interest rates are sometimes called the "the price of holding money."
3.      If investment spending became less sensitive to interest rates, how would this affect the strength of monetary policy?
4.      The demand for money will decrease as income falls. Use this fact to explain why interest rates usually fall in a recession.
5. What is the opportunity cost to a bank of holding excess reserves ?
6. If banks hold excess reserves, how will this affect the money multiplier?
7. Explain the mechanism through which an increase in the discount rate would affect the money s
Submitted: 8 years ago.
Category: Homework
Expert:  Joanne replied 8 years ago.

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