Question 1

Which country is correctly matched with its 2009 inflation rate?

Accepted Answer

A)   9 percent inflation in the United States.
B)   3.6 percent inflation in Russia.
C)   59 percent inflation in Venezuela.
D)   9.3 percent inflation in India.E) A) and D)
F) B) and D)

Question 2

When the consumer price index increases, the value of your money has _____. According to the quantity theory of money this is caused by an increase in the _____.

Accepted Answer

fallen, mo...

Question 3

The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent. What is the real interest rate?

Accepted Answer

A)   5.25 percent
B)   5 percent
C)   2.3 percent
D)   2 percentE) A) and B)
F) A) and C)

Question 4

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

Accepted Answer

A)   The dollar price of jeans and the relative price of jeans are both nominal variables.
B)   The dollar price of jeans and the relative price of jeans are both real variables.
C)   The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable.
D)   The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable.E) A) and C)
F) C) and D)

Question 5

The primary reason people hold money is

Accepted Answer

A)   to keep wealth in a less liquid form.
B)   to use it as a medium of exchange.
C)   to use it for investment.
D)   to earn interest.E) A) and B)
F) B) and C)

Question 6

If P denotes the price of goods and services measured in terms of money, then

Accepted Answer

A)   1/P represents the value of money measured in terms of goods and services.
B)   P can be regarded as the "overall price level."
C)   an increase in the value of money is associated with a decrease in P.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 7

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. 
-Refer to Figure 30-3. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

Accepted Answer

A)   0.5 and the equilibrium value of money is 2.
B)   2 and the equilibrium value of money is 0.5.
C)   0.5 and the equilibrium value of money cannot be determined from the graph.
D)   2 and the equilibrium value of money cannot be determined from the graph.E) A) and D)
F) A) and C)

Question 8

Market economies rely on which of the following to allocate scarce resources?

Accepted Answer

A)   government
B)   consumers
C)   relative prices
D)   real interest ratesE) None of the above
F) All of the above

Question 9

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Accepted Answer

A)   Austria in the 1920's.
B)   Hungary in the 1920's.
C)   Poland in the 1920's.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 10

The source of hyperinflations is primarily

Accepted Answer

A)   lower output growth.
B)   continuing declines in velocity.
C)   increases in money-supply growth.
D)   continuing increases in money demand.E) A) and B)
F) B) and D)

Question 11

Nominal GDP measures

Accepted Answer

A)   the total quantity of final goods and services produced.
B)   the dollar value of the economy's output of final goods and services.
C)   the total income received from producing final goods and services measured in constant dollars.
D)   the overall level of prices.E) B) and C)
F) B) and D)

Question 12

The price level rises 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) A) and B)
F) A) and C)

Question 13

If inflation is higher than expected, then borrowers make nominal interest payments that are less than they expected.

Accepted Answer

A) True 
 B)False

Question 14

Based on the quantity equation, if Y = 3,000, P = 3, and V = 4, then M =

Accepted Answer

A)   $4,000.
B)   $2,250.
C)   $250.
D)   $36,000.E) B) and C)
F) A) and D)

Question 15

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. 
-Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS1; also suppose the economy's real GDP is 30,000 for the year. If the money market is in equilibrium, then the velocity of money is approximately

Accepted Answer

A)   3.0
B)   6.0
C)   9.0
D)   1.5E) B) and C)
F) None of the above

Question 16

The price level rises if either

Accepted Answer

A)   money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a rise in the value of money.
B)   money demand shifts rightward or money supply shifts leftward; this rise in the price level is associated with a fall in the value of money.
C)   money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a rise in the value of money.
D)   money demand shifts leftward or money supply shifts rightward; this rise in the price level is associated with a fall in the value of money.E) B) and C)
F) B) and D)

Question 17

When the money market is drawn with the value of money on the vertical axis, if there is a shortage of money then

Accepted Answer

A)   the value of money rises which will make people desire to hold more money.
B)   the value of money rises which will make people desire to hold less money.
C)   the value of money falls which will make people desire to hold more money.
D)   the value of money falls which will make people desire to hold less money.E) A) and B)
F) A) and C)

Question 18

Figure 30-1 
-Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then there is an excess

Accepted Answer

A)   demand for money that is represented by the distance between points A and C.
B)   demand for money that is represented by the distance between points A and B.
C)   supply of money that is represented by the distance between points A and C.
D)   supply of money that is represented by the distance between points A and B.E) A) and C)
F) B) and D)

Question 19

With the value of money on the vertical axis, the money supply curve is

Accepted Answer

A)   upward sloping because people supply a larger quantity of money when the value of money increases.
B)   downward sloping because people supply a larger quantity of money when the value of money decreases.
C)   horizontal because we assume the central bank controls the money supply
D)   vertical because we assume the central bank controls the money supply.E) All of the above
F) C) and D)

Question 20

When the money market is drawn with the value of money on the vertical axis, as the price level increases which of the following increases?

Accepted Answer

A)   the quantity of money demanded and the quantity of money supplied
B)   the quantity of money demanded but not the quantity of money supplied
C)   the quantity of money supplied but not the quantity of money demanded
D)   neither the quantity of money supplied nor the quantity of money demandedE) A) and D)
F) A) and B)

Exam 17: Money Growth and Inflation

If P denotes the price of goods and services measured in terms of money, then

Correct Answer
verified

Market economies rely on which of the following to allocate scarce resources?

Correct Answer
verified

Figure 30-1 -Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then there is an excess

Correct Answer
verified

The price level rises if either

Correct Answer
verified

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

Correct Answer
verified

The source of hyperinflations is primarily

Correct Answer
verified

The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent. What is the real interest rate?

Correct Answer
verified

The price level rises if either

Correct Answer
verified

When the consumer price index increases, the value of your money has _. According to the quantity theory of money this is caused by an increase in the _.

Correct Answer
verified
fallen, mo...
View Answer

Nominal GDP measures

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis, if there is a shortage of money then

Correct Answer
verified

The primary reason people hold money is

Correct Answer
verified

Based on the quantity equation, if Y = 3,000, P = 3, and V = 4, then M =

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis, as the price level increases which of the following increases?

Correct Answer
verified

If inflation is higher than expected, then borrowers make nominal interest payments that are less than they expected.

Correct Answer
verified

Which country is correctly matched with its 2009 inflation rate?

Correct Answer
verified

Correct Answer
verified

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Correct Answer
verified

With the value of money on the vertical axis, the money supply curve is

Correct Answer
verified

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. -Refer to Figure 30-3. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

Correct Answer
verified

Exam 17: Money Growth and Inflation

If P denotes the price of goods and services measured in terms of money, then

Correct AnswerverifiedShow Answer

Market economies rely on which of the following to allocate scarce resources?

Correct AnswerverifiedShow Answer

Figure 30-1 -Refer to Figure 30-1. If the money supply is MS2 and the value of money is 2, then there is an excess

Correct AnswerverifiedShow Answer

The price level rises if either

Correct AnswerverifiedShow Answer

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

Correct AnswerverifiedShow Answer

The source of hyperinflations is primarily

Correct AnswerverifiedShow Answer

The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent. What is the real interest rate?

Correct AnswerverifiedShow Answer

The price level rises if either

Correct AnswerverifiedShow Answer

When the consumer price index increases, the value of your money has _____. According to the quantity theory of money this is caused by an increase in the _____.

Correct Answerverifiedfallen, mo...View AnswerShow Answer

Nominal GDP measures

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis, if there is a shortage of money then

Correct AnswerverifiedShow Answer

The primary reason people hold money is

Correct AnswerverifiedShow Answer

Based on the quantity equation, if Y = 3,000, P = 3, and V = 4, then M =

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis, as the price level increases which of the following increases?

Correct AnswerverifiedShow Answer

If inflation is higher than expected, then borrowers make nominal interest payments that are less than they expected.

Correct AnswerverifiedShow Answer

Which country is correctly matched with its 2009 inflation rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Correct AnswerverifiedShow Answer

With the value of money on the vertical axis, the money supply curve is

Correct AnswerverifiedShow Answer

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. -Refer to Figure 30-3. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

Correct AnswerverifiedShow Answer

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When the consumer price index increases, the value of your money has _. According to the quantity theory of money this is caused by an increase in the _.

Correct Answer
verified
fallen, mo...
View Answer

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