Question 1

If M = $500,P = $20,and Q = 100,then V is

Accepted Answer

A)  2.5. 
B)  4.0. 
C)  5.0 
D)  6.0 
E)  7.5 
A)  2.5. 
B)  4.0. 
C)  5.0 
D)  6.0 
E)  7.5

Question 2

Suppose we are at a long-run equilibrium point in an AD-AS model.Then the money supply increases.In the short run,is there any difference between what happens in the simple quantity theory of money (SQTM)version and the monetarist version of the model?

Accepted Answer

A)  There is no difference. 
B)  In the SQTM version, the price level rises; in the monetarist version, it does not. 
C)  In the monetarist version, the price level falls; in the SQTM version, it does not. 
D)  In the monetarist version, the Real GDP rises; in the SQTM version, it does not. 
E)  In the SQTM version, Real GDP falls; in the monetarist version, it does not. 
A)  There is no difference. 
B)  In the SQTM version, the price level rises; in the monetarist version, it does not. 
C)  In the monetarist version, the price level falls; in the SQTM version, it does not. 
D)  In the monetarist version, the Real GDP rises; in the SQTM version, it does not. 
E)  In the SQTM version, Real GDP falls; in the monetarist version, it does not.

Question 3

Which of the following statements is false?

Accepted Answer

A)  Monetarists believe that the velocity of money is highly stable. 
B)  Monetarists believe that the velocity of money is predictable. 
C)  Monetarists believe that the economy will settle into long-run equilibrium at less than full employment output. 
D)  Monetarists believe that output can be at less than full employment output in the short run. 
A)  Monetarists believe that the velocity of money is highly stable. 
B)  Monetarists believe that the velocity of money is predictable. 
C)  Monetarists believe that the economy will settle into long-run equilibrium at less than full employment output. 
D)  Monetarists believe that output can be at less than full employment output in the short run.

Question 4

According to the simple quantity theory of money,if the money supply falls by 20 percent,

Accepted Answer

A)  the price level will fall by 20 percent. 
B)  Real GDP will rise by less than 20 percent. 
C)  GDP will fall by 20 percent. 
D)  velocity will rise. 
E)  a and c 
A)  the price level will fall by 20 percent. 
B)  Real GDP will rise by less than 20 percent. 
C)  GDP will fall by 20 percent. 
D)  velocity will rise. 
E)  a and c

Question 5

Exhibit 14-2
  
-Refer to Exhibit 14-2.The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7.Is this consistent with one-shot declines originating on the supply-side of the economy combined with continued increases in aggregate demand?

Accepted Answer

A)  No, continued supply-induced inflation would be more likely to move the economy from point 1 to 2 and then in a northwesterly direction from point 2. 
B)  No, continued supply-induced inflation would be more likely to move the economy from point 1 to 3 to 5. 
C)  No, continued supply-induced inflation would be more likely to move the economy from 1 to 2 and then in a southwesterly direction from point 2. 
D)  Yes. 
A)  No, continued supply-induced inflation would be more likely to move the economy from point 1 to 2 and then in a northwesterly direction from point 2. 
B)  No, continued supply-induced inflation would be more likely to move the economy from point 1 to 3 to 5. 
C)  No, continued supply-induced inflation would be more likely to move the economy from 1 to 2 and then in a southwesterly direction from point 2. 
D)  Yes.

Exam 14: Money and the Economy

If M = $500,P = $20,and Q = 100,then V is

Suppose we are at a long-run equilibrium point in an AD-AS model.Then the money supply increases.In the short run,is there any difference between what happens in the simple quantity theory of money (SQTM)version and the monetarist version of the model?

Which of the following statements is false?

According to the simple quantity theory of money,if the money supply falls by 20 percent,

Exhibit 14-2 -Refer to Exhibit 14-2.The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7.Is this consistent with one-shot declines originating on the supply-side of the economy combined with continued increases in aggregate demand?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

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Production and Costs

Perfect Competition

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Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

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Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

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