In the Money Channel View of How Changes in the Money

question 73

Multiple Choice

In the money channel view of how changes in the money supply affect output and the real interest rate in the short run,

• A)other financial assets are considered to be poor substitutes for bank loans by many borrowers.
• B)banks are passive intermediaries, meeting the public's demand for money by supplying deposits.
• C)credit crunches have a very important role to play.
• D)interest rates do not necessarily bring the volume of funds desired to be lent by savers into equilibrium with the volume of funds desired to be borrowed by borrowers.

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Definitions:

Eurobonds

Bonds issued in a currency other than the currency of the country or market in which it is issued, often used by companies to raise capital in foreign markets.

Yankee Bonds

Bonds issued by foreign entities in the U.S. market, denominated in U.S. dollars, to raise capital from American investors.

Samurai Bonds

Bonds issued in Japan by foreign entities, denominated in Japanese yen.

Synthetically Created

Created or manufactured using a combination of elements and processes to replicate or improve upon a natural product or financial instrument.