Economists have long pondered the reasons why people hold money. Some reasons seem to be more important than others. Perhaps not among the most important but still a reason why people demand money is the precautionary motive. This precautionary demand for money refers to the demand
a. to satisfy everyday transactions
b. for investment purposes
c. for speculative purposes such as having money available to take advantage of stock purchases
d. to protect against inflation
e. to cover unexpected events
E
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The official unemployment rate may understate the true rate of unemployment because of
A) discouraged workers who no longer are actively seeking work and are excluded from the statistics. B) increases in worker productivity. C) workers who hold two jobs. D) changes in wage rates.
If the banking system's money multiplier is 4, then a $2,000 increase in checkable deposits when banks hold excess reserves will result in which of the following events?
a. The money supply will decrease b. The money supply will not change. c. The money supply will increase by exactly $8,000. d. The money supply will increase by more than $8,000. e. The money supply will increase by less than $8,000.