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Unit 4
Financial Sector
4.1: Financial Assets
4.2: Nominal vs. Real Interest Rates
4.3: Definition, Measurement, and Functions of Money
4.4: Banking and the Expansion of the Money Supply
4.5: The Money Market
4.6: Open Market Operations
Unit Test
Comprehension Check
The Money Market
4 questions
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The demand curve for money is downward sloping because:
A
a higher nominal interest rate reduces the purchasing power of money.
B
the central bank increases the money supply when interest rates are high.
C
a lower nominal interest rate decreases the opportunity cost of holding money.
D
a higher price level requires people to hold more money for transactions.
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Unit 4 Study Guide
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