Flow variable

1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly. Income is a flow variable while financial wealth is a stock variable. Economists distinguish between investors as those who produce goods and services, and traders as those who buy and sell financial instruments. The demand for money is determined by income but not by interest rates. Eurodollars comprise of the proportion of U.S. currency that is held in Europe only. The central bank can contract money supply by selling Treasury bonds in the market for bonds. Monetary policy determines money supply while interest policy determines interest rates As the price of a bond rises, its interest rate also rises. The central bank can either increase the money sup- ply or raise interest rates to boost GDP growth in the economy.