ECON 3222 FINAL EXAM REVIEW Exam

ECON 3222 FINAL EXAM REVIEW Exam Questions and Answers (Solved Papers) 1) When we speak of money demand, we are referring to

• The demand for dollars
• The desire and ability of economic agents to hold money,

either as specie / currency... or as checkable deposits in the banking system

• The equilibrium interest rate in real terms
• Market participants desire to borrow money st the federal

reserve's "discount rate" for a specified allotment of time - Correct Answers ✅b. The desire and ability of economic agents to hold money, either as specie / currency... or as checkable deposits in the banking system 2) for markets to function efficiently must be sufficiently low

• Transaction costs
• Prices
• Supply
• Demand - Correct Answers ✅a. Transaction costs

3) Transaction Costs include

• Search, Transportation, and shipping costs
• Negotiation and legal costs
• Information and time / effort costs
• All of the Above - Correct Answers ✅d. All of the Above 1 / 4

ECON 3222 FINAL EXAM REVIEW Exam Questions and Answers (Solved Papers) 4) Barter as a form of Trade suffers from a coincidence of wants and their salability across

• Scales
• Time
• Space
• All of the above - Correct Answers ✅d. All of the above

5) At lower prices (higher interest rates), ceteris paribus, the quantity demanded of bonds is ______

• Higher, an inverse relationship
• Lower, an inverse relationship
• Higher, a positive relationship
• Lower, a positive relationship - Correct Answers ✅a.

Higher, an inverse relationship 6) At higher prices (lower interest rates), ceteris paribus, the quantity demanded of bonds is ______

• higher, an inverse relationship
• lower, a positive relationship
• lower, an inverse relationship
• higher, a positive relationship - Correct Answers ✅b.

lower, a positive relationship 7) Bond prices and interest rates are related 2 / 4

ECON 3222 FINAL EXAM REVIEW Exam Questions and Answers (Solved Papers)

• Positively
• Proportionally
• Not
• Inversely - Correct Answers ✅d. Inversely

8) The determinants of demand for bonds include

• Expected returns and expected inflation
• Wealth
• Risk and liquidity
• All of the above - Correct Answers ✅d. All of the above

9) Higher expected inflation _____ the real return to holding a bond (versus other real assets) and thus the demand for bonds

• Decreases, increases
• Increase, increase
• Decreases, decreases
• Increases, decreases - Correct Answers ✅c. Decreases,

decreases 10) the determinants of supply for bonds include

• Expected profitability of investment opportunities
• Expected inflation 3 / 4

ECON 3222 FINAL EXAM REVIEW Exam Questions and Answers (Solved Papers)

• Government budget deficits / surpluses
• All of the above - Correct Answers ✅d. All of the above

11) a rise in expected inflation shifts the bond demand curve and the bond supply curve causing the price of bonds to and the interest rate to

• Leftward, rightward, fall, rise
• Leftward, rightward, rise, fall
• Rightward, leftward, rise, fall
• Rightward, leftward, fall, rise - Correct Answers ✅a.

Leftward, rightward, fall, rise 12) a business cycle expansion shifts the bond supply curve and the bond demand curve , buf by a less amount so the price of bonds and the equilibrium interest rate

• Rightwards, leftward, fall, rise
• Leftward, rightward, rise, fall
• Leftward, leftward, rises, falls
• Rightward, rightward, falls, rises - Correct Answers ✅d.

Rightward, rightward, falls, rises 13) the is an economic theory that describes the relationship between inflation and both real and nominal interest rates

• Real interest effect
• Paradox effect
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