Exam 8: Money, the Price Level, and Inflation

Which of the following is true regarding the quantity theory of money? I. The theory predicts that in the long run the inflation rate equals the money growth rate minus t growth rate of real GDP. II. The theory predicts that countries with high growth rates of money will have high inflation rate III. The theory predicts that increases in the growth rate of velocity lowers the inflation rate.

The direct exchange of goods and services for other goods and services is known as

If the price level rises, the quantity of

The quantity theory of money addresses the

Which of the following is a tool that is used by the Fed to control the quantity of money?

A depository institution receives deposits from lenders and makes loans to borrowers.

Are checks money?

Examples of thrift institutions include

The main policy- making body of the Federal Reserve System is the

Financial innovations can have the effect of

-In the figure above, if the interest rate is 4 percent, there is a $0.1 trillion excess

The quantity of money in an economy is $9 million, and the velocity of circulation is 3. Nominal GDP in this economy is _.

-In the balance sheet above, the entries are in millions of dollars for the FBN Bank. If the desired reserve ratio on deposits is 10 percent, FBN Bank has desired reserves of

A depository institution creates liquidity and pools risk.

What makes up M1? Is M1 larger or smaller than real GDP?

The monetary expansion process from an open market operation continues until

The Federal Open Market Committee

When banks use specialized resources to monitor borrowers, they are

Depository institutions undertake all the following activities except they do not _ _.

Barter eliminates the double coincidence of wants.