True or False:
1. The demand for money, particularly for transactions purposes, is highly dependent on income levels because the transaction volume varies directly with income.
2. At lower interest rates, the quantity of money demanded, but not the demand for money, is greater.
3. An increase in the money supply raises the equilibrium nominal interest rate.
4. The Fed buying bonds on the open market is an example of an expansionary monetary policy.
5. When the price of bonds rises, the interest rate rises.
6. The Fed cannot control both the money supply and the interest rate at the same time.
7. If the demand for money increases, and the Fed wants to keep the interest rate stable, it will have to increase the money supply.
8. Focusing on growth in the money supply when the demand for money is changing unpredictably will lead to large fluctuations in the interest rate.