Filters
Question type
Study Flashcards

If the real interest rate is 5% and the inflation rate is 3%, then the nominal interest rate is 8%.

A) True
B) False

Correct Answer

verifed

verified

Monetary neutrality means that a change in the money supply


A) does not change real GDP. Most economists think this is a good description of the economy in the short run and in the long run.
B) does not change real GDP. Most economists think this is a good description of the economy in the long run but not the short run.
C) does change real GDP. Most economists think this is a good description of the economy in the short-run and the long run.
D) does change real GDP. Most economists think this is a good description of the economy in the long run but not the short run.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

The costs a business incurs to change its prices are called .

Correct Answer

verifed

verified

If people had been expecting prices to rise but in fact prices fell, then who among the following would benefit?


A) lenders and people holding a lot of currency
B) lenders but not people holding a lot of currency
C) people holding a lot of currency but not lenders
D) neither lenders nor people holding a lot of currency

E) B) and C)
F) C) and D)

Correct Answer

verifed

verified

Consider the money market drawn with the value of money on the vertical axis. If money demand is unchanged and the price level rises, then


A) the money supply must have increased, perhaps because the Fed bought bonds.
B) the money supply must have increased, perhaps because the Fed sold bonds.
C) the money supply must have decreased, perhaps because the Fed bought bonds.
D) the money supply must have decreased, perhaps because the Fed sold bonds.

E) A) and C)
F) A) and B)

Correct Answer

verifed

verified

Figure 30-2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. Figure 30-2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. -Refer to Figure 30-2. If the relevant money-demand curve is the one labeled MD1, then the equilibrium value of money is A) 0.5 and the equilibrium price level is 2. B) 2 and the equilibrium price level is 0.5. C) 0.5 and the equilibrium price level cannot be determined from the graph. D) 2 and the equilibrium price level cannot be determined from the graph. -Refer to Figure 30-2. If the relevant money-demand curve is the one labeled MD1, then the equilibrium value of money is


A) 0.5 and the equilibrium price level is 2.
B) 2 and the equilibrium price level is 0.5.
C) 0.5 and the equilibrium price level cannot be determined from the graph.
D) 2 and the equilibrium price level cannot be determined from the graph.

E) None of the above
F) C) and D)

Correct Answer

verifed

verified

Suppose that monetary neutrality and the Fisher effect both hold and the money supply growth rate has been the same for a long time. Other things the same a higher money supply growth would be associated with


A) both higher inflation and higher nominal interest rates.
B) a higher inflation rate, but not higher nominal interest rates.
C) a higher nominal interest rate, but not higher inflation.
D) neither a higher inflation rate nor a higher nominal interest rate.

E) C) and D)
F) All of the above

Correct Answer

verifed

verified

The principle of monetary neutrality implies that an increase in the money supply will


A) increase real GDP and the price level.
B) increase real GDP, but not the price level.
C) increase the price level, but not real GDP.
D) increase neither the price level nor real GDP.

E) B) and C)
F) A) and C)

Correct Answer

verifed

verified

The velocity of money is


A) the rate at which the Fed puts money into the economy.
B) the same thing as the long-term growth rate of the money supply.
C) the money supply divided by nominal GDP.
D) the average number of times per year a dollar is spent.

E) B) and D)
F) None of the above

Correct Answer

verifed

verified

According to the classical dichotomy and money neutrality, a doubling of the money supply, holding all else constant, causes prices to and real GDP to .

Correct Answer

verifed

verified

double, re...

View Answer

The country of Robinya has a tax system identical to that of the United States. Suppose someone in Robinya bought a parcel of land for 10,000 deera the local currency) in 1970 when the price index equaled 100. In 2010, the person sold the land for 100,000 deera, and the price index equaled 500. The tax rate on nominal capital gains was 20 percent. Compute the taxes the person paid on the nominal gain and the change in the real value of the land in terms of 2010 prices to find the after-tax real rate of capital gain.


A) -20 percent
B) 20 percent
C) 42 percent
D) 64 percent

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

When the money market is drawn with the value of money on the vertical axis, if the Fed sells bonds then


A) the money supply and the price level increase.
B) the money supply and the price level decrease.
C) the money supply increases and the price level decreases.
D) the money supply increases and the price level increases.

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

In the last part of the 1800's


A) deflation made it harder for farmers to pay off their debt.
B) deflation made it easier for farmers to pay off their debt.
C) inflation made it harder for farmers to pay off their debt.
D) inflation made it easier for farmers to pay off their debt.

E) C) and D)
F) None of the above

Correct Answer

verifed

verified

Which of the following is correct?


A) A period of hyperinflation is a period of extraordinarily low inflation.
B) A period of deflation is any period during which the inflation rate is decreasing.
C) From 2002 to 2012, U.S. inflation averaged about 2.5 percent per year.
D) All of the above are correct.

E) B) and C)
F) None of the above

Correct Answer

verifed

verified

If the economy unexpectedly went from inflation to deflation,


A) both debtors and creditors would have reduced real wealth.
B) both debtors and creditors would have increased real wealth.
C) debtors would gain at the expense of creditors.
D) creditors would gain at the expense of debtors.

E) None of the above
F) A) and C)

Correct Answer

verifed

verified

If M = 12,000, P = 3, and Y = 32,000, then velocity =


A) 1.125. Velocity will rise if money changes hands more frequently.
B) 1.125. Velocity will rise if money changes hands less frequently.
C) 8. Velocity will rise if money changes hands more frequently.
D) 8. Velocity will rise if money changes hands less frequently.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

For a given real interest rate, an increase in inflation makes the after-tax real interest rate


A) decrease, which encourages savings.
B) decrease, which discourages savings.
C) increase, which encourages savings.
D) increase, which discourages savings.

E) A) and C)
F) A) and B)

Correct Answer

verifed

verified

Norma receives an increase in her nominal income. She complains that the current inflation rate of six percent erodes the real purchasing power of her additional nominal income. This is true


A) only if the increase in her nominal income is less than six percent.
B) only if the increase in her nominal income is more than six percent.
C) since inflation always reduces purchasing power.
D) only if her real income increases.

E) B) and D)
F) None of the above

Correct Answer

verifed

verified

Velocity is computed as the


A) price level times real GDP divided by the money supply.
B) price level times the money supply divided by real GDP.
C) real GDP times the money supply divided by the price level.
D) real GDP times the money supply divided by the rate at which money changes hands.

E) B) and C)
F) All of the above

Correct Answer

verifed

verified

People can reduce the inflation tax by


A) reducing savings.
B) increasing deductions on their income tax.
C) reducing cash holdings.
D) None of the above is correct.

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

Showing 121 - 140 of 487

Related Exams

Exam 1

Ten Principles of Economics

438 Questions

Exam 2

Thinking Like an Economist

620 Questions

Exam 3

Interdependence and the Gains From Trade

527 Questions

Exam 4

The Market Forces of Supply and Demand

700 Questions

Exam 5

Elasticity and Its Application

598 Questions

Exam 6

Supply, Demand, and Government Policies

648 Questions

Exam 7

Consumers, Producers, and the Efficiency of Markets

547 Questions

Exam 8

Application: the Costs of Taxation

514 Questions

Exam 9

Application: International Trade

496 Questions

Exam 10

Measuring a Nations Income

522 Questions

Exam 11

Measuring the Cost of Living

545 Questions

Exam 12

Production and Growth

507 Questions

Exam 13

Saving, Investment, and the Financial System

567 Questions

Exam 14

The Basic Tools of Finance

513 Questions

Exam 15

Unemployment

699 Questions

Exam 16

The Monetary System

517 Questions

Exam 18

Open-Economy Macroeconomics: Basic Concepts

522 Questions

Exam 19

A Macroeconomic Theory of the Open Economy

484 Questions

Exam 20

Aggregate Demand and Aggregate Supply

563 Questions

Exam 21

The Influence of Monetary and Fiscal Policy on Aggregate Demand

511 Questions

Exam 22

The Short-Run Trade-Off Between Inflation and Unemployment

516 Questions

Exam 23

Six Debates Over Macroeconomic Policy

372 Questions

Show Answer