Question

6. When Jose uses money to buy her lunch, she is showing the use of money as a "store of value."

7. The required reserve ratio helps determine the amount of money banks can create.

8. If the central bank carries out an open market purchase, the quantity of money decreases.

9. If the central bank sells bonds in the open market, net exports will increase.

10. In the short run, the central bank's actions to fight inflation shift the aggregate demand curve leftward.

Answer 1

6.

True.

Mooney forms a basic mechanism to store the value. By virtue of money, she can provide the value of the watch and get the watch.

....

7.

True

Required reserve ratio determine how much of the total deposits should be kept as cash reserves by the banks. This influences the amount of money available to be given as credit by the banks. It's credit which determines the money creation by the banks.

.....

8.  

False.

When the central bank purchases securities, it is buying them from the people in exchange of money. So the people are getting money for the securities they are selling to the central bank. This increaes the quantity of money.

....

9.

True

When central bank sells bonds in the open market, people buy them in exchange for money. So money flows from the people to the central bank. So the money supply in the economy falls. As people have less money in their hands, they will import less from abroad. However the export is not affected. So the net exports will rise.

....

10.

True

In the short run, the central bank will undertake contractionary monetary policy to check aggregate demand in the economy and hence check the inflation. So the aggregate demand at the same level of prices will be lower than before, for every price level. This tantamounts to a shift leftwards of the aggregate demand curve in the short run.

......

Hope this helps!