[Solved] Use the Following Figure to Nswer the Question

If the Fed wants to permanently lower interest rates,then it should raise the rate of money growth if A)there is fast adjustment of expected inflation. B)there is slow adjustment of expected inflation. C)the liquidity effect is smaller than the expected inflation effect. D)the liquidity effect is larger than the other effects.

If the liquidity effect is smaller than the other effects,and the adjustment to expected inflation is slow,then the A)interest rate will fall. B)interest rate will rise. C)interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth. D)interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth.

If the liquidity effect is smaller than the other effects,and the adjustment to expected inflation is immediate,then the A)interest rate will fall. B)interest rate will rise. C)interest rate will fall immediately below the initial level when the money supply grows. D)interest rate will rise immediately above the initial level when the money supply grows.

Use the following figure to nswer the question : -In the figure above, illustrates the effect of an increased rate of money supply growth at time period 0. From the figure, one can conclude that the A)liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B)liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C)liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D)liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation.

Use the following figure to nswer the question : -In the figure above,illustrates the effect of an increased rate of money supply growth at time period 0. From the figure,one can conclude that the A)Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B)liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C)liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D)Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.

Use the following figure to nswer the question : -The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure,one can conclude that the A)Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B)liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C)liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D)Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.

Use the following figure to answer the question : -The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure,one can conclude that the A)liquidity effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. B)liquidity effect is larger than the expected inflation effect and interest rates adjust quickly to changes in expected inflation. C)liquidity effect is larger than the expected inflation effect and interest rates adjust slowly to changes in expected inflation. D)liquidity effect is smaller than the expected inflation effect and interest rates adjust slowly to changes in expected inflation.

Use the following figure to answer the question : -The figure above illustrates the effect of an increased rate of money supply growth at time period T0. From the figure,one can conclude that the A)Fisher effect is dominated by the liquidity effect and interest rates adjust slowly to changes in expected inflation. B)liquidity effect is dominated by the Fisher effect and interest rates adjust slowly to changes in expected inflation. C)liquidity effect is dominated by the Fisher effect and interest rates adjust quickly to changes in expected inflation. D)Fisher effect is smaller than the expected inflation effect and interest rates adjust quickly to changes in expected inflation.

Use the following figure to answer the question : -Interest rates increased continuously during the 1970s. The most likely explanation is A)banking failures that reduced the money supply. B)a rise in the level of income. C)the repeated bouts of recession and expansion. D)increasing expected rates of inflation.

The riskiness of an asset is measured by A)the magnitude of its return. B)the absolute value of any change in the asset's price. C)the standard deviation of its return. D)risk is impossible to measure.