Question 1

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) None of the above
F) A) and B)

Question 2

The term hyperinflation refers to

Accepted Answer

A)   the spread of inflation from one country to others.
B)   a decrease in the inflation rate.
C)   a period of very high inflation.
D)   inflation accompanied by a recession.E) B) and C)
F) A) and D)

Question 3

Over time both real GDP and the price level have trended upward.Which of these trends would the classical dichotomy say could be explained by an upward trend in the money supply?

Accepted Answer

A)   both the upward trend in real GDP and the upward trend in the price level
B)   the upward trend in real GDP but not the upward trend in the price level
C)   the upward trend in the price level but not the upward trend in real GDP
D)   neither the upward trend in the price level nor the upward trend in real GDPE) B) and D)
F) All of the above

Question 4

An increase in money demand would create a surplus of money at the original value of money.

Accepted Answer

A) True 
 B)False

Question 5

In the long run,an increase in the growth rate of the money supply leads to an increase in the real interest rate,but no change in the nominal interest rate.

Accepted Answer

A) True 
 B)False

Question 6

When the money market is drawn with the value of money on the vertical axis,as the price level decreases,the value of money

Accepted Answer

A)   increases,so the quantity of money demanded increases.
B)   increases,so the quantity of money demanded decreases.
C)   decreases,so the quantity of money demanded decreases.
D)   decreases,so the quantity of money demanded increases.E) A) and B)
F) None of the above

Question 7

Figure 17-2.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes. 2.At the end of 2010 the relevant money-demand curve was the one labeled MD1.Assuming the economy is always in equilibrium,what was the economy's approximate inflation rate for 2010? A)  -43 percent B)  -57 percent C)  57 percent D)  75 percent" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 17-2.At the end of 2009 the relevant money-demand curve was the one labeled MD2.At the end of 2010 the relevant money-demand curve was the one labeled MD1.Assuming the economy is always in equilibrium,what was the economy's approximate inflation rate for 2010?

Accepted Answer

A)   -43 percent
B)   -57 percent
C)   57 percent
D)   75 percentE) All of the above
F) C) and D)

Question 8

The Fisher effect is crucial for understanding changes over time in

Accepted Answer

A)   the nominal interest rate.
B)   the real interest rate.
C)   the inflation rate.
D)   the unemployment rate.E) A) and B)
F) A) and C)

Question 9

In the long run inflation is explained by __________.For countries that had hyperinflation this source of inflation arose primarily because the government __________.

Accepted Answer

rapid money supply g...

Question 10

The costs of changing price tags and price listings are known as

Accepted Answer

A)   inflation-induced tax distortions.
B)   relative-price variability costs.
C)   shoeleather costs.
D)   menu costs.E) C) and D)
F) B) and D)

Question 11

If a bank posts a nominal interest rate of 11 percent,and inflation is expected to be 4 percent,then

Accepted Answer

A)   the expected real interest rate is 11 percent.
B)   the expected real interest rate is 7 percent.
C)   the expected real interest rate is 4 percent.
D)   the expected real interest rate is 15 percent.E) None of the above
F) A) and B)

Question 12

There was hyperinflation during the

Accepted Answer

A)   period 1880-1896 in the United States.
B)   1970s in the United States.
C)   early part of the current century in Zimbabwe.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 13

From the early 1980's through the 1990's,the nominal interest rate

Accepted Answer

A)   fell because the Fed got inflation under control.
B)   fell because the Fed let inflation get out of control.
C)   rose because the Fed got inflation under control.
D)   rose because the Fed let inflation get out of control.E) A) and C)
F) A) and B)

Question 14

In 2010 the U.S.government was running a large deficit.Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit.If the Fed were to buy government bonds to help the government finance its expenditures,then

Accepted Answer

A)   the price level would fall,so the value of money would fall.
B)   the price level would fall,so the value of money would rise.
C)   the price level would rise,so the value of money would fall.
D)   the price level would rise,so the value of money would rise.E) All of the above
F) A) and B)

Question 15

Which of the following is not correct?

Accepted Answer

A)   The inflation rate is measured as the percentage change in a price index.
B)   For the last 40 or so years,U.S.inflation hasn't shown much variation from its average rate of about 2 percent.
C)   During the 19th century there were long periods of falling prices in the U.S.
D)   Some economists argue that the costs of moderate inflation are not nearly as large as the general public believes.E) A) and B)
F) None of the above

Question 16

Which of the following statements concerning the history of U.S.inflation is not correct?

Accepted Answer

A)   Prices rose at an average annual rate of about 4 percent over the last 70 years.
B)   There was about a 16-fold increase in the price level over the last 70 years.
C)   Inflation in the 1970s was below the average over the last 70 years.
D)   The United States has experienced periods of deflation.E) None of the above
F) All of the above

Question 17

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 growth of real GDP.
B)   the inflation rate but not the growth rate of real GDP.
C)   the growth rate of real GDP,but not the inflation rate.
D)   neither the inflation rate nor the growth rate of real GDP.E) B) and C)
F) A) and B)

Question 18

One year ago Sam purchased bonds for $100,000.He just sold them for $120,000.During the year the price level rose by 5%.If the tax rate on capital gains is 20%,how much did Sam gain in real terms?

Accepted Answer

The answer of One year ago Sam purchased bonds for...

Question 19

According to the classical dichotomy,which of the following is not influenced by monetary factors?

Accepted Answer

A)   nominal GDP and nominal interest rates
B)   real wages and real GDP
C)   the price level and nominal GDP
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 20

What two key assumptions does the quantity theory make concerning variables in the equation of exchange?

Accepted Answer

That V is ...

Exam 30: Money Growth and Inflation

According to the classical dichotomy,which of the following is not influenced by monetary factors?

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

Over time both real GDP and the price level have trended upward.Which of these trends would the classical dichotomy say could be explained by an upward trend in the money supply?

Correct Answer
verified

An increase in money demand would create a surplus of money at the original value of money.

Correct Answer
verified

There was hyperinflation during the

Correct Answer
verified

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

The Fisher effect is crucial for understanding changes over time in

Correct Answer
verified

In the long run inflation is explained by .For countries that had hyperinflation this source of inflation arose primarily because the government .

Correct Answer
verified
rapid money supply g...
View Answer

One year ago Sam purchased bonds for $100,000.He just sold them for $120,000.During the year the price level rose by 5%.If the tax rate on capital gains is 20%,how much did Sam gain in real terms?

Correct Answer
verified

If a country experienced deflation,then

Correct Answer
verified

In the long run,an increase in the growth rate of the money supply leads to an increase in the real interest rate,but no change in the nominal interest rate.

Correct Answer
verified

From the early 1980's through the 1990's,the nominal interest rate

Correct Answer
verified

The costs of changing price tags and price listings are known as

Correct Answer
verified

If a bank posts a nominal interest rate of 11 percent,and inflation is expected to be 4 percent,then

Correct Answer
verified

In 2010 the U.S.government was running a large deficit.Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit.If the Fed were to buy government bonds to help the government finance its expenditures,then

Correct Answer
verified

What two key assumptions does the quantity theory make concerning variables in the equation of exchange?

Correct Answer
verified
That V is ...
View Answer

When the money market is drawn with the value of money on the vertical axis,as the price level decreases,the value of money

Correct Answer
verified

The term hyperinflation refers to

Correct Answer
verified

Which of the following statements concerning the history of U.S.inflation is not correct?

Correct Answer
verified

Exam 30: Money Growth and Inflation

According to the classical dichotomy,which of the following is not influenced by monetary factors?

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

Over time both real GDP and the price level have trended upward.Which of these trends would the classical dichotomy say could be explained by an upward trend in the money supply?

Correct AnswerverifiedShow Answer

An increase in money demand would create a surplus of money at the original value of money.

Correct AnswerverifiedShow Answer

There was hyperinflation during the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

The Fisher effect is crucial for understanding changes over time in

Correct AnswerverifiedShow Answer

In the long run inflation is explained by __________.For countries that had hyperinflation this source of inflation arose primarily because the government __________.

Correct Answerverifiedrapid money supply g...View AnswerShow Answer

One year ago Sam purchased bonds for $100,000.He just sold them for $120,000.During the year the price level rose by 5%.If the tax rate on capital gains is 20%,how much did Sam gain in real terms?

Correct AnswerverifiedShow Answer

If a country experienced deflation,then

Correct AnswerverifiedShow Answer

In the long run,an increase in the growth rate of the money supply leads to an increase in the real interest rate,but no change in the nominal interest rate.

Correct AnswerverifiedShow Answer

From the early 1980's through the 1990's,the nominal interest rate

Correct AnswerverifiedShow Answer

The costs of changing price tags and price listings are known as

Correct AnswerverifiedShow Answer

If a bank posts a nominal interest rate of 11 percent,and inflation is expected to be 4 percent,then

Correct AnswerverifiedShow Answer

In 2010 the U.S.government was running a large deficit.Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit.If the Fed were to buy government bonds to help the government finance its expenditures,then

Correct AnswerverifiedShow Answer

What two key assumptions does the quantity theory make concerning variables in the equation of exchange?

Correct AnswerverifiedThat V is ...View AnswerShow Answer

When the money market is drawn with the value of money on the vertical axis,as the price level decreases,the value of money

Correct AnswerverifiedShow Answer

The term hyperinflation refers to

Correct AnswerverifiedShow Answer

Which of the following statements concerning the history of U.S.inflation is not correct?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

In the long run inflation is explained by .For countries that had hyperinflation this source of inflation arose primarily because the government .

Correct Answer
verified
rapid money supply g...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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That V is ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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