Answer to Question #130942 in Macroeconomics for Valerie

Question

Question 1
Which one of the following statements is incorrect?
[1] The opportunity cost of holding money balances is the interest that could have been earned if the money had been used to purchase interest-bearing assets instead.
[2] The quantity of money demanded for transaction purposes depends on the interest rate.
[3] The demand for money as an asset is also called the speculative demand for money.
[4] The quantity of money demanded for speculative purposes is negatively related to the interest rate.

Question 2
The function of the South African Reserve Bank as bank supervisor entails …
[1] reducing interbank settlement risks by reducing the potential for settlement default by one or more banks.
[2] making, issuing and destroying banknotes and coins.
[3] achieving a sound, efficient banking system in the interest of depositors of banks and the economy as a whole.
[4] formulating an exchange rate policy.

Answer 1

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