The equilibrium rate of interest in the market for money is determined by the intersection of the

Question

BlackTom AI · Accepted Answer

To approach this question, we start by identifying what determines the equilibrium interest rate in the money market. The money market equilibrium occurs at the rate where money supply equals money demand. Now, let's analyze each option in that light.

Option 1: 'supply-of-money curve and the total-demand-for-money curve.' This aligns with the standard view that the equilibrium interest rate is set where the money supply intersects the money demand (the total demand for money). The total demand for money typically encompasses all motives for holding money, including transaction and asset motives, so this pairing makes conceptual sense for establishing equilibrium.

Option 2: 'investment-demand curve and the total-demand-for-money curve.' The investment-demand curve pertains to the demand for loanable funds in the context of the capital market, not the money market. This option mixes market frameworks and would not correctly identify the money-market equilibrium condition, since the investment-demand curve is driven by factors like the expected return on investment, not by the quantity of money supplied.

Option 3: 'supply-of-money curve and the asset-demand-for-money curve.' While asset demand is a component of the overall money demand, the equilibrium in the money market is found where the money supply equals the total money demand, not just its asset portion. Focusing only on the asset-demand-for-money curve omits other motives (such as transactions), potentially misrepresenting the full demand side.

Option 4: 'supply-of-money curve and the transactions-demand-for-money curve.' The transactions demand for money is indeed a key component of money demand, especially for day-to-day transactions. However, the full equilibrium typically requires considering the TOTAL demand for money (including both transactions and asset motives). Limiting the intersection to only the transactions-demand part provides an incomplete picture of money-market equilibrium.

In summary, the correct interpretation hinges on the idea that the equilibrium interest rate in the money market is determined where money supply intersects the total money demand, not merely its individual components or market segments. Each of the incorrect options either misidentifies the market (loanable funds vs. money market) or narrows the demand side to a partial component, rather than the comprehensive total demand that interacts with money supply to fix the rate.

The equilibrium rate of interest in the market for money is determined by the intersection of the

查看解析

登录即可查看完整答案

类似问题

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

The CVP and break-even analysis are supported by a range of important assumptions. Which of the following is not an assumption of the CVP:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单