Question 1

The inflation rate is measured as the percentage change in a price index.

Accepted Answer

A) True 
 B)False

Question 2

Open-market purchases by the Fed make the money supply

Accepted Answer

A)   increase,which makes the value of money increase.
B)   increase,which makes the value of money decrease.
C)   decrease,which makes the value of money decrease.
D)   decrease,which makes the value of money increase.E) None of the above
F) B) and C)

Question 3

The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the

Accepted Answer

A)   velocity concept.
B)   Fisher effect.
C)   classical dichotomy.
D)   Mankiw effect.E) B) and C)
F) None of the above

Question 4

Figure 30-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes. 2;also suppose the economy's real GDP is 45,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately A)  4.5 B)  6.0 C)  9.0 D)  12.0" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 30-3.Suppose the relevant money-supply curve is the one labeled MS2;also suppose the economy's real GDP is 45,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately

Accepted Answer

A)   4.5
B)   6.0
C)   9.0
D)   12.0E) None of the above
F) C) and D)

Question 5

Over the past 70 years,the overall price level in the U.S.has experienced a(n)

Accepted Answer

A)   4-fold increase.
B)   8-fold increase.
C)   12-fold increase.
D)   16-fold increase.E) None of the above
F) All of the above

Question 6

Velocity is

Accepted Answer

A)   Y/(M x P) and increases if dollars are exchanged less frequently.
B)   Y/(M x P) and increases if dollars are exchanged more frequently.
C)   (P x Y) /M and increases if dollars are exchanged less frequently.
D)   (P x Y) /M and increases if dollars are exchanged more frequently.E) B) and D)
F) B) and C)

Question 7

Under the assumptions of the Fisher effect and monetary neutrality,if the money supply growth rate rises,then

Accepted Answer

A)   both the nominal and the real interest rate rise.
B)   neither the nominal nor the real interest rate rise.
C)   the nominal interest rate rises,but the real interest rate does not.
D)   the real interest rate rises,but the nominal interest rate does not.E) None of the above
F) B) and D)

Question 8

Over the past 70 years,prices in the U.S.have risen on average about

Accepted Answer

A)   2 percent per year.
B)   4 percent per year.
C)   6 percent per year.
D)   8 percent per year.E) A) and C)
F) C) and D)

Question 9

If the price level increased from 120 to 150,then what was the inflation rate?

Accepted Answer

A)   30 percent
B)   25 percent
C)   20 percent
D)   None of the above is correct.E) C) and D)
F) A) and B)

Question 10

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Accepted Answer

A)   the inflation rate and nominal interest rates.
B)   the inflation rate,but not nominal interest rates.
C)   nominal interest rates,but not the inflation rate.
D)   neither the inflation rate nor nominal interest rates.E) C) and D)
F) B) and D)

Question 11

In order to maintain stable prices,a central bank must

Accepted Answer

A)   maintain low interest rates.
B)   keep unemployment low.
C)   tightly control the money supply.
D)   sell indexed bonds.E) A) and C)
F) B) and C)

Question 12

Kristi purchased one share of Genuine Co.stock for $200;one year later she sold that share for $400.The inflation rate over the year was 50 percent.The tax rate on nominal capital gains is 50 percent.What was the tax on Kristi's capital gain?

Accepted Answer

A)   $50
B)   $75
C)   $100
D)   $200E) A) and B)
F) None of the above

Question 13

The price level is determined by the supply of,and demand for,money.

Accepted Answer

A) True 
 B)False

Question 14

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Accepted Answer

A)   the inflation rate and the nominal interest rate by the same number of percentage points.
B)   nominal interest rates but by less than the percentage point increase in the inflation rate.
C)   the inflation rate but not the nominal interest.
D)   neither the inflation rate nor the nominal interest rate.E) A) and C)
F) A) and B)

Question 15

If Y and V are constant,and M doubles,the quantity equation implies that the price level

Accepted Answer

A)   more than doubles.
B)   changes but less than doubles.
C)   doubles.
D)   does not changeE) B) and C)
F) C) and D)

Question 16

If a country experienced deflation,then

Accepted Answer

A)   the nominal interest rate would be greater than the real interest rate.
B)   the real interest rate would be greater than the nominal interest rate.
C)   the real interest rate would equal the nominal interest rate.
D)   None of the above is necessarily correct.E) All of the above
F) A) and D)

Question 17

Most economists believe that monetary neutrality provides

Accepted Answer

A)   a good description of both the long run and the short run.
B)   a good description of neither the long run nor the short run.
C)   a good description of the short run,but not the long run.
D)   a good description of the long run,but not the short run.E) None of the above
F) All of the above

Question 18

The price level falls if either

Accepted Answer

A)   money demand or money supply shifts rightward.
B)   money demand shifts rightward or money supply shifts leftward.
C)   money demand shifts leftward or money supply shifts rightward.
D)   money demand or money supply shifts leftward.E) C) and D)
F) A) and C)

Question 19

Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold.What happens to inflation,real interest rates,and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent?

Accepted Answer

Inflation and nominal interest...

Question 20

When the money market is drawn with the value of money on the vertical axis,an increase in the money supply shifts the money supply curve to the

Accepted Answer

A)   right,lowering the price level.
B)   right,raising the price level.
C)   left,raising the price level.
D)   left,lowering the price level.E) B) and D)
F) None of the above

Exam 30: Money Growth and Inflation

Correct Answer
verified

If the price level increased from 120 to 150,then what was the inflation rate?

Correct Answer
verified

Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold.What happens to inflation,real interest rates,and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent?

Correct Answer
verified
Inflation and nominal interest...
View Answer

In order to maintain stable prices,a central bank must

Correct Answer
verified

If Y and V are constant,and M doubles,the quantity equation implies that the price level

Correct Answer
verified

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Correct Answer
verified

Velocity is

Correct Answer
verified

If a country experienced deflation,then

Correct Answer
verified

Over the past 70 years,prices in the U.S.have risen on average about

Correct Answer
verified

The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the

Correct Answer
verified

Over the past 70 years,the overall price level in the U.S.has experienced a(n)

Correct Answer
verified

The inflation rate is measured as the percentage change in a price index.

Correct Answer
verified

Kristi purchased one share of Genuine Co.stock for $200;one year later she sold that share for $400.The inflation rate over the year was 50 percent.The tax rate on nominal capital gains is 50 percent.What was the tax on Kristi's capital gain?

Correct Answer
verified

Most economists believe that monetary neutrality provides

Correct Answer
verified

Under the assumptions of the Fisher effect and monetary neutrality,if the money supply growth rate rises,then

Correct Answer
verified

The price level falls if either

Correct Answer
verified

Open-market purchases by the Fed make the money supply

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis,an increase in the money supply shifts the money supply curve to the

Correct Answer
verified

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Correct Answer
verified

The price level is determined by the supply of,and demand for,money.

Correct Answer
verified

Exam 30: Money Growth and Inflation

Correct AnswerverifiedShow Answer

If the price level increased from 120 to 150,then what was the inflation rate?

Correct AnswerverifiedShow Answer

Suppose that velocity and output are constant and that the quantity theory and the Fisher effect both hold.What happens to inflation,real interest rates,and nominal interest rates when the money supply growth rate increases from 5 percent to 10 percent?

Correct AnswerverifiedInflation and nominal interest...View AnswerShow Answer

In order to maintain stable prices,a central bank must

Correct AnswerverifiedShow Answer

If Y and V are constant,and M doubles,the quantity equation implies that the price level

Correct AnswerverifiedShow Answer

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Correct AnswerverifiedShow Answer

Velocity is

Correct AnswerverifiedShow Answer

If a country experienced deflation,then

Correct AnswerverifiedShow Answer

Over the past 70 years,prices in the U.S.have risen on average about

Correct AnswerverifiedShow Answer

The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the

Correct AnswerverifiedShow Answer

Over the past 70 years,the overall price level in the U.S.has experienced a(n)

Correct AnswerverifiedShow Answer

The inflation rate is measured as the percentage change in a price index.

Correct AnswerverifiedShow Answer

Kristi purchased one share of Genuine Co.stock for $200;one year later she sold that share for $400.The inflation rate over the year was 50 percent.The tax rate on nominal capital gains is 50 percent.What was the tax on Kristi's capital gain?

Correct AnswerverifiedShow Answer

Most economists believe that monetary neutrality provides

Correct AnswerverifiedShow Answer

Under the assumptions of the Fisher effect and monetary neutrality,if the money supply growth rate rises,then

Correct AnswerverifiedShow Answer

The price level falls if either

Correct AnswerverifiedShow Answer

Open-market purchases by the Fed make the money supply

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis,an increase in the money supply shifts the money supply curve to the

Correct AnswerverifiedShow Answer

Suppose that monetary neutrality and the Fisher effect both hold.An increase in the money supply growth rate increases

Correct AnswerverifiedShow Answer

The price level is determined by the supply of,and demand for,money.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Inflation and nominal interest...
View Answer

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verified

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Correct Answer
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