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Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly. Income is a flow variable...
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
- Income is a flow variable while financial wealth is a stock variable.
- Economists distinguish between investors as those who produce goods and services, and traders as those who buy and sell financial instruments.
- The demand for money is determined by income but not by interest rates.
- Eurodollars comprise of the proportion of U.S. currency that is held in Europe only.
- The central bank can contract money supply by selling Treasury bonds in the market for bonds.
- Monetary policy determines money supply while interest policy determines interest rates
- As the price of a bond rises, its interest rate also rises.
- The central bank can either increase the money sup- ply or raise interest rates to boost GDP growth in the economy.