According to Keynes, the relationship between money supply and rate of interest is:

Related Mcqs:

1. Keynes liquidity preference theory of the interest rate suggests that the interest rate is determined by ?

   A. aggregate supply and aggregate demand B. the supply and demand for loanable funds C. the supply and demand for money D. the supply and demand for labor...

2. When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate ?

   A. None of these answers B. decrease the quantity demanded of money C. increase the quantity demanded of money D. decreases the demand for money E. increases the demand for money...

3. When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level ?

   A. shifts money demand to the right and increases the interest rate B. None of these answers C. shifts money demand to the right and decreases the interest rate D. shifts money demand to the left and increases the interest rate E. shifts money demand to the left and decrease the interest rate...

4. For the United States suppose the annual interest rate on government securities equals 8 percent while the annual inflation rate equals 4 percent, For Switzerland the annual interest rate on government securities equal 10 percent while the annual inflation rate equals 7 percent the above variables would cause investment funds to flow from ?

   A. the United States to Switzerland causing the dollar to depreciate B. the United States to Switzerland causing the dollar to appreciate C. Switzerland to the United States causing the franc to depreciate D. Switzerland to the United States causing the franc to appreciate...

5. For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?

   A. The United States to Japan causing the dollar to depreciate B. The United States to Japan causing the dollar to appreciate C. The Japan to United States, causing the dollar to depreciate D. The Japan to United States, causing the dollar to appreciate...

6. The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the ?

   A. money supply curve B. LM curve C. money demand curve D. IS curve...

7. If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?

   A. 4 percent B. 10 percent C. -4 percent D. 3 percent E. 21 percent...

8. If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?

   A. change in a certain direction B. remain constant C. fall D. rise...

9. According to the quantity theory of money an increase in the money supply is most likely to lead to inflation if ?

   A. The velocity of circulation decrease B. The number of transaction decrease C. There is deflation D. The velocity of circulation and the number of transactions is constant...

10. According to the model of aggregate supply and aggregate demand in the long run an increase in the money supply should cause ?

    A. Prices to rise and output to rise B. Price to fall and output to remain unchanged C. Prices to fall and output to fall D. prices to rise and output to remain unchanged...