Answer to Question #107621 in Economics of Enterprise for Jon Boi

Question

Money and Banking

2. What happens to money demand if _______?
a. The interest rate on bonds falls
b. Liquidity of other assets rise.

Chapter 20

3. The effect of a decrease in the U.S. interest rate on U.S. net exports.
a. If the interest rate in the U.S. falls foreigners will want to purchase ___________ U.S. bonds,
b. so, the demand for U.S. currency in the market for foreign exchange _________
c. so, the exchange rate (the price of the U.S. dollar in terms of foreign currency) ________
d. so, U.S goods become relatively ____________
e. so, U.S. imports ________ and U.S exports _______
f. so, U.S. net exports _________.
g. Is this change in net exports an autonomous change?

Answer 1

2.aDemand for money will rise .

b.Money demand will increase.Money provide a liquidity which creates a trade off between the liquidity advantage of holding money and the intrest advantage of holding other assets.

3a.More US bonds

b.Increase

c.Increase

d.Expensive

e.Increase ,decrease

g.No