Which of the following is true?
A) The money market model is essentially a model that determines the short-term nominal rate of interest.
B) The money market model is essentially a model that determines the short-term real rate of interest.
C) The loanable funds model is essentially a model that determines the short-term real rate of interest.
D) The loanable funds model is essentially a model that determines the long-term nominal rate of interest.
Answer: A
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In the foreign exchange market, an increase in the exchange rate leads to
A) an increase in the quantity of dollars demanded and no movement along the demand curve for dollars. B) an increase the quantity of dollars supplied and a movement along the supply curve of dollars. C) an increase the quantity of dollars supplied and no movement along the supply curve of dollars. D) a decrease the quantity of dollars supplied and a movement along the supply curve of dollars. E) an increase in the quantity of dollars demanded and a movement along the demand curve for dollars.
People react to an excess supply of money by:
a. buying bonds, thus driving down the interest rate. b. selling bonds, thus driving down the interest rate. c. selling bonds, thus driving up the interest rate. d. buying bonds, thus driving up the interest rate.