In the money market, the money supply curve is depicted as: a. upward sloping b. downward sloping...
Question:
In the money market, the money supply curve is depicted as:
a. upward sloping
b. downward sloping
c. horizontal
d. vertical
Money Supply:
The money supply is the sum of money circulating in the economy. Money supply involves all cash, coins, and balances in bank accounts. An increase in money supply spurs economic development because more money is availed to consumers who increase their spending and investments.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer- The correct answer is D: Vertical.
The money market is a diagrammatic representation depicting the interconnection between the demand for money and...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
The Money Market: Money Supply and Money Demand Curves
from
Chapter 11 / Lesson 10
141K
Learn about the money market. See how money demand and money supply are represented on the money market graph. Compare the money demand and money supply curves.
Related to this Question
- Monetary policy is most effective when the demand curve for money is: A. horizontal B. vertical C. upward sloping D. downward sloping
- The savings supply curve is A. upward sloping. B. vertical. C. downward sloping. D. horizontal.
- The supply curve for land is ordinarily A) downward sloping. B) horizontal. C) upward sloping. D) vertical.
- When the money market is drawn with the value of money on the vertical axis, an increase in the money supply shifts the money supply curve to the: a. right, lowering the price level. b. right, raising the price level. c. left, raising the price level
- The long-run aggregate supply curve is: a. vertical. b. upward sloping. c. horizontal. d. U-shaped.
- When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an: a. excess supply of money, so the price level will rise. b. excess supply of money, so the price level will
- When the money market is drawn with the value of money on the vertical axis, if money supply and money demand both shift to the right: A. the price level must have risen. B. the price level must have fallen. C. the price level rises if money supply shifts
- In the short run (not the very short run), the aggregate supply curve A.Slopes Downward B.Is horizontal C. Is vertical D. Slopes upward
- The market supply curve in an increasing-cost industry is? A) upward sloping B) downward sloping C) vertical D) horizontal E) none of the above
- For normal goods, supply curves are: a. downward sloping b. upward sloping c. horizontal d. vertical
- A long-run aggregate supply curve may graphically be represented as a: A. a horizontal line. B. an upward sloping line. C. a downward sloping line. D. a vertical line.
- In an increasing-cost industry, the long-run market supply curve is? a) negatively sloped b) horizontal c) positively sloped d) vertical
- The long run aggregate supply curve A. has a negative slope. B. curve has a steep but positive slope. C. is horizontal. D. is vertical.
- In an economy where nominal incomes adjust equally to changes in the price level, we would expect the long-run aggregate supply curve to be: a. horizontal b. vertical c. negatively sloped d. positively sloped
- When the money market is drawn with the value of money on the vertical axis, a decrease in the money supply leads people to: a. spend more so the value of a dollar rises. b. spend more so the value of a dollar falls. c. spend less so the value of a dollar
- If neither investment nor consumption depends on the interest rate, then the IS curve is and policy has no effect on output. A. vertical; monetary B. horizontal; monetary C. vertical; fiscal D. horizontal; fiscal
- When nominal wages adjust more slowly than changes in the price level, then the aggregate supply schedule is: a. Downward sloping, b. Upward sloping, c. Horizontal, d. Vertical, e. Shaped like a parabola.
- In an economy where nominal incomes adjust equally to changes in the price level, we would expect the long-run aggregate supply curve to be ______. a. vertical. b. horizontal. c. negatively sloped. d. positively sloped.
- If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve (SRAS) is: a. horizontal b. vertical c. negatively sloped d. positively sloped
- In the shrt run, the aggregate suppy curve A. is vertical B. slopes upward C. slopes downward D. is horizontal
- If nominal wages and salaries are fixed as firms change product prices, the short-run aggregate supply curve (SRAS) is a. vertical. b. horizontal. c. negatively sloped. d. positively sloped.
- A {Blank} market yield curve could be considered an indicator for stable future inflation rates. A. slightly upward sloping B. steeply upward sloping C. flat D. downward sloping
- Money supply is charted as a vertical line in a supply curve. Demand is a downward sloping line. Where they intersect is where interest rates are. You can see from that supply curve how increasing money supply reduces interest rates. Why did interest
- The crowding out effect is zero if: a) the LM-curve is horizontal. b) the LM-curve is vertical. c) the Fed conducts open market sales following fiscal expansion. d) income is stimulated via a tax cut rather than an increase in government spending. e) non
- When an aggregate demand curve is drawn with real GDP (Y) along the horizontal axis and the price level (P) along the vertical axis, if the money supply is decreased, then the aggregate demand curve w
- If the economy is in the vertical portion of the aggregate supply curve, according to monetarists, an increase in the money supply in the long run will a) Increase the price level. b) Decrease the p
- An increase in equilibrium real GDP, due to an increase in the money supply will occur only if: a. the aggregate demand curve is horizontal b. the aggregate supply curve is vertical c.
- An industry that has increasing returns to scale and fixed factor prices will have a long-run supply curve that is: Downward-sloping Horizontal Upward-sloping Vertical
- Using AS/AD and IS/LM analysis, illustrate the short-run effects of an expansionary monetary policy. Assume that the SRAS curve is upward sloping, but not vertical.
- Given a vertical aggregate supply curve, which of the following is most likely to occur if the Fed pursues restrictive monetary policy? a. The equilibrium price level and output will both increase.
- The decrease in aggregate demand leads to a movement along the (Dickensian, horizontal, vertical) range of the aggregate supply curve, causing the equilibrium price level to (increase, decrease, remai
- The short-run aggregate supply curve: is vertical and the long-run aggregate supply curve is vertical. slopes upward and the long-run aggregate supply curve slopes upward. slopes upward, but the long-
- If an economy is operating at full employment: A. The AS curve is vertical B. The AS curve is upward sloping, but not wholly vertical C. The AS curve is horizontal D. an increase in autonomous expenditure will learn to no increase in equilibrium outp
- In a supply-and-demand diagram for Korean Won, with the exchange rate in dollars per won on the vertical axis, the supply schedule for won is drawn sloping: a. Upward b. Vertical c. Downward d. Ho
- When the money market is drawn with the value of money on the vertical axis, if there is a shortage of money then: A. The value of money rises which will make people desire to hold more money. B. The value of money rises which will make people desire to h
- The supply of loanable funds curve has a [{Blank}] slope and the demand for loanable funds curve has a [{Blank}] slope. a. negative; negative, b. positive; positive, c. positive; negative, d. vertical; horizontal, e. negative; positive.
- The declining marginal product of labor and the increasing upward pressure on money wages as output and employment increase explain why the Keynesian aggregate supply schedule is: a. downward sloping b. horizontal c. vertical d. fixed e. upward sloping
- Fiscal policy is most effective in changing the level of real output without causing inflation when the short run aggregate supply curve is: a. Horizontal b. Vertical c. Upward Sloping d. The shape of
- In a market, where the demand curve is downward-sloping and the supply curve is upward-sloping, an increase in income (and the good is inferior) will cause? a. The equilibrium price to rise, and the equilibrium quantity to fall. b. The equilibrium price
- Suppose the supply curve of medical services is perfectly inelastic. What is the shape of supply curve (e.g. vertical, horizontal, upward sloping)? Also analyze the impact of a decrease in consumer income on the market price and quantity of medical servic
- 1. Timing evidence showed that a fall in _ caused a fall in _ a. the money supply; output. b. prices; output. c. output; money supply. d. none of the above. 2. The short run AS curve shifts left if
- The typical aggregate demand curve has a positive slope in the short run and: a. is vertical in the long run. b. is horizontal. c. is downward sloping. d. is horizontal in the short run but has a negative slope in the long run.
- According to classical economists, the aggregate supply curve is: a. vertical in both the long run and the short run b. vertical only in the long run c. vertical only in the short run d. horizontal in the short run
- The short-run Phillips curve is: A. downward sloping. B. positively sloped. C. horizontal. D. the same as the short-run aggregate supply curve.
- According to Keynes: a. markets are perfectly competitive. b. nominal wages and/or prices are sticky. c. the short-run aggregate supply curve is vertical. d. money illusion does not exist.
- In the new classical model, the aggregate supply curve is: A) upward sloping in both the short run and the long run. B) perfectly vertical at the natural rate of unemployment in both the short run and the long run. C) upward sloping in the short run and p
- When the substitution effect dominates the income effect, the labor supply curve is? A) vertical B) positively sloped. C) negatively sloped D) shifting rightward. E) horizontal.
- The market supply curve of capital is: a. Upward sloping, b. Perfectly inelastic, c. U-shaped, d. Downward sloping, e. Perfectly elastic.
- The LRAC curve generally is A. downward sloping. B. upward sloping. C. shaped like an upside-down U. D. U-shaped.
- The compensate labor supply curve: A)will always be vertical B)will always be upward sloping C)will always be downward sloping D)reflects both the income and substitution effects of wage changes
- Monetary policy will be more effective the {Blank} the IS curve is and the {Blank} the LM curve is. A. steeper; flatter B. flatter; steeper C. steeper; steeper D. flatter; flatter
- Sticky wages is used to explain why the: A. Investment curve is vertical B. Aggregate demand curve is downward sloping C. Short run aggregate supply curve is upward sloping D. Long run aggregate suppl
- The aggregate demand curve is: a) Horizontal when there is considerable unemployment in the economy, b) Vertical if full employment exists, c) Downward sloping because production costs decrease as real output increases, d) Downward sloping because of
- Graph the Money Market Model showing an increase in transaction demand for money.
- 1. In the classical model, it is thought that the long-run: A. and short-run aggregate supply curves are both upward sloping. B. aggregate supply curve is vertical and the short-run aggregate supply
- 1. If the demand for labor is plotted against the money wage, with the money wage on the vertical axis, then A) an increase in the price level will cause the labor demand schedule to shift to the rig
- 1. The marginal revenue curve of a perfectly competitive firm A. lies below the firm's demand curve. B. increases at an increasing rate as output expands. C. is horizontal at the market price. D. is downward-sloping because price must be reduced to sell m
- The long-run aggregate supply curve is vertical: 1) because the rate of inflation is steady in the long run. 2) because resource prices eventually rise and fall with product prices. 3) because product prices tend to increase at a faster rate than resource
- The short-run aggregate supply curve: a) is vertical because the economy is at full capacity. b) is upward sloping because some costs are slow to rise as output expands. c) cannot be generalized because each economy is unique. d) is horizontal because inp
- In the AD-AS model, an unexpected decrease in the growth rate of the money supply causes: a) a rightward shift of the AD curve and then an upward shift of the SRAS curve. b) a rightward shift of the AD curve and then a downward shift of the SRAS curve.
- Graph the Money Market Model showing a decrease in the precautionary demand for money.
- If the AS-AD curves are in equilibrium in the vertical range of the AS curve, then: A) there is inflationary pressure in the price level B) the economy is experiencing unemployment C) the economy is p
- A decrease in the money supply causes the {Blank} curve to shift to the left and equilibrium output to {Blank}. A. LM; fall B. LM; rise C. IS; rise D. IS; rise
- State the asset market equilibrium condition. Draw graphs to show the change in money market equilibrium
- The typical aggregate demand curve (i) is horizontal (ii) has a positive slope in the short run and is vertical in the long run (iii) is horizontal in the short run but has a negative slope in the long-run (iv) is downward sloping
- Monetarists believe that: a. velocity changes in a predictable way. b. aggregate supply depends on the money supply and velocity. c. the SRAS curve is horizontal. d. the SRAS curve is downward-sloping.
- The aggregate demand curve is: a) Horizontal when there is considerable unemployment in the economy. b) Vertical if full employment exists. c) Downward sloping because production costs decrease as real output increases. d) Downward sloping because of int
- On a graph, with commodity x on the horizontal axis and commodity y on the vertical axis, show the substitution and income effects of a decrease in the price of y. You should assume that y is an inferior good and that the substitution effect is smaller th
- If the price of a variable resource increased for the typical firm, there would be: A downward shift in the AVC curve An upward shift in the AFC curve A downward shift in the AFC curve An upward shift
- If the price level falls and the money wage rate does not change, some firms {Blank} and there is {Blank}. A. start up; a rightward shift of the aggregate supply curve B. shut down; a leftward shift of the aggregate supply curve C. shut down; a decrease i
- Monetary policy will have a large income effect provided the A) LM curve is flat B) IS curve is steep C) IS curve is flat D) LM curve is steep
- According to Keynes a. money illusion does not exist. b. nominal wages and/or prices are sticky. c. the short-run aggregate supply curve is vertical. d. markets are perfectly competitive.
- -Multiple Choice- 1. A change in the interest rate does not affect the quantity of money supplied. This means that: a) The money supply curve is negatively sloped. b) The money supply curve is
- In a dynamic model of money, if money supply and trend output is constant over time: A. nominal supply of money will be constant, while nominal demand for money will decrease, B. nominal supply of money will decrease, while nominal demand for money will b
- When a firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is and the firm is experiencing. a. horizontal; constant returns to scale b. downward sloping; constant returns to scale c. upward sloping; dis
- Labor markets are typically represented by: A. individual labor supply curves that slope upward B. market supply curves that are backward bending C. market supply curves that slope upward D. none of the above
- Suppose a budget line is drawn with X on the horizontal axis and Y on the vertical axis. A decrease in the price of X will cause A. an increase in the vertical intercept and no change in the horizontal intercept. B. a decrease in the vertical intercep
- If the marginal propensity to save is 0.25, autonomous planned investment spending increases by $5,000, and real national income increases by $12,000, then the aggregate supply curve is: a. horizontal b. vertical c. upward sloping d. downward sloping
- What effect do open market purchases have on the money supply curve? a. They shift it to the left. b. They shift it to the right. c. They cause a movement upward along the supply curve. d. They cause a movement downward along the supply curve.
- 1. The equilibrium interest rate is determined by a. downward movement along the demand curve for money. b. leftward movement along the supply money. c. aggregate demand and supply intersect rightwa
- If the value of a country's currency decreases and the foreign currency price of its imports decreases, it must mean _____. a. The country is a price maker. b. Its demand curve for imports is positively sloped. c. It faces a horizontal supply curve of imp
- The demand for loanable funds curve is: a) Downward sloping when plotted against the real interest rate, b) Vertical at the full employment level of investment, c) Upward sloping when plotted against the real interest rate, d) Constant at the maximum expe
- A decrease in the real money supply caused by an increase in the price level is graphically represented by: a. a movement along the AD curve to the right b. a shift of the AD curve to the left c. a movement along the AD curve to the left d. an increase in
- The vertical long-run aggregate supply curve implies that: a. changes in aggregate demand will have no effect on the price level. b. the short-run aggregate supply curve is also vertical. c. natural or full-employment real GDP does not depend on the price
- Keynesians reject the influence of monetary policy on the economy. One argument supporting this Keynesian view is that the: a. money demand curve is horizontal at any interest rate. b. aggregate demand curve is nearly flat. c. investment demand curve is n
- Suppose you have drawn a consumer's budget line for food and clothing with food on the horizontal axis and clothing on the vertical axis. If the price of food increases: A. the budget line becomes flatter. B. the budget line becomes steeper. C. the budget
- If income rises, the budget constraint: a. Moves outward away from the origin. b. Does not move. c. Moves inward toward the origin. d. Moves farther down the vertical axis.
- A fall in supply means a A. rightward shift of the supply curve. B. downward shift of the supply curve. C. movement down along the supply. D. None of the above.
- The demand curve for a good is very unlikely to be perfectly vertical because: A. scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive. B. as the price of a good rises to high enough levels, the incen
- According to the law of demand, a demand curve: a. is upward sloping. b. is downward sloping. c. is a horizontal, or flat, line. d. can slope either upward or downward based on consumer behavior.
- The increased demand for cash shifts the LM curve up. This happens because, at any given level of income and money supply, the interest rate necessary to equilibrate the money market is higher. The upward shift in the LM curve lowers income and raises the
- When the demand curve is vertical and the supply curve is upward sloping, a. a drop in the input price that lowers the marginal cost by $1, decreases the output price by $1. b. a rise in the input price that increases marginal cost by $1, decreases the f
- In the short-run, a temporary increase in the money supply A) shifts the AA curve to the right, increases output and depreciates the currency in the equilibrium. B) shifts the AA curve to the left, increases output and depreciates the currency in the
- In the liquidity-preference model, a decline in prices causes the: A. money supply curve to shift to the right, B. money demand curve to shift to the left, C. money demand curve to shift to the right, D. money supply curve to shift to the left.
- At a given price level, an increase in stock market wealth will shift the aggregate demand curve: A) rightward. B) leftward. C) both. D) none of the above.
- If the supply curve for a good is horizontal and the price is positive, then a leftward shift of the demand curve results in A. an increase in price. B. no change in price. C. a price of zero. D. a decrease in price.
- If the Fed buys Treasury bills, this will A) shift the money supply curve to the right. B) shift the money supply curve to the left. C) shift the money demand curve to the right. D) shift the mone
- If the demand for money and the supply of money both decrease, the equilibrium: a. interest rate will decline, but we cannot predict the change in the equilibrium quantity of money. b. quantity of money and the equilibrium interest rate will both increase
- In the short-run, a temporary increase in the money supply: A) shifts the AA curve to the right, increases output and depreciates the currency in the equilibrium B) shifts the AA curve to the left, increases output and depreciates the currency in the equi
- A. In the country of Suburbia equilibrium in the money market and output market exist at a per capita income of $30,000 and a market interest rate of 5%. An influx of wealth has raised average per cap
Explore our homework questions and answers library
Browse
by subject