Question 1

Control of the nation's quantity of money is handled by

Accepted Answer

A)  Congress, the Federal Reserve System, and all commercial banks. 
B)  the Federal Reserve System. 
C)  the President of the United States. 
D)  Congress. 
A)  Congress, the Federal Reserve System, and all commercial banks. 
B)  the Federal Reserve System. 
C)  the President of the United States. 
D)  Congress.

Question 2

When real GDP increases, people demand

Accepted Answer

A)  more money in nominal terms but less in real terms. 
B)  more real money. 
C)  less real money. 
D)  the same quantity of real money. 
A)  more money in nominal terms but less in real terms. 
B)  more real money. 
C)  less real money. 
D)  the same quantity of real money.

Question 3

Credit cards are NOT money because they

Accepted Answer

A)  have a value in exchange but little intrinsic value. 
B)  do not serve as a unit of account. 
C)  are not issued by the government. 
D)  are ID cards that make borrowing easier. 
A)  have a value in exchange but little intrinsic value. 
B)  do not serve as a unit of account. 
C)  are not issued by the government. 
D)  are ID cards that make borrowing easier.

Question 4

Suppose that the money multiplier is 4. If the monetary base decreases by $2 million, the quantity of money will

Accepted Answer

A)  decrease by $8 million. 
B)  increase by $500,000. 
C)  decrease by $500,000. 
D)  increase by $8 million. 
A)  decrease by $8 million. 
B)  increase by $500,000. 
C)  decrease by $500,000. 
D)  increase by $8 million.

Question 5

Which of the following decreases the demand for nominal money?

Accepted Answer

A)  an increase in real GDP 
B)  a decrease in the price level 
C)  an increase in the quantity of money 
D)  a decrease in the nominal interest rate 
A)  an increase in real GDP 
B)  a decrease in the price level 
C)  an increase in the quantity of money 
D)  a decrease in the nominal interest rate

Question 6

The quantity theory of money states that

Accepted Answer

A)  as the interest rate rises, the demand for money decreases. 
B)  inflation increases when the money growth rate increases. 
C)  changes in the quantity of money are determined by the commercial banks and not the Federal Reserve. 
D)  as the price level increases, the demand for money increases. 
A)  as the interest rate rises, the demand for money decreases. 
B)  inflation increases when the money growth rate increases. 
C)  changes in the quantity of money are determined by the commercial banks and not the Federal Reserve. 
D)  as the price level increases, the demand for money increases.

Question 7

According to the quantity theory of money, inflation causes an increase in the money supply.

Accepted Answer

A) True 
 B)False

Question 8

The inflation rate in Venezuela has increased between 2005 and 2008, rising from 14 percent per year to 37 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to 5 percent per year. The quantity theory of money

Accepted Answer

A)  predicts that nominal GDP will decrease over the period. 
B)  predicts that the velocity of money will decrease over the period. 
C)  states that the growth rate of money must have increased over the period. 
D)  states that the inflation rate over the period would average 4 percent. 
A)  predicts that nominal GDP will decrease over the period. 
B)  predicts that the velocity of money will decrease over the period. 
C)  states that the growth rate of money must have increased over the period. 
D)  states that the inflation rate over the period would average 4 percent.

Question 9

If the desired reserve ratio rises, the money multiplier

Accepted Answer

A)  increases. 
B)  stays the same. 
C)  decreases. 
D)  probably changes but more information is needed to determine if it increases or decreases. 
A)  increases. 
B)  stays the same. 
C)  decreases. 
D)  probably changes but more information is needed to determine if it increases or decreases.

Question 10

-In the above figure, suppose the economy is initially at point a. If the interest rate increases, there is a movement to point such as

Accepted Answer

A)  b. 
B)  e. 
C)  d. 
D)  c. 
A)  b. 
B)  e. 
C)  d. 
D)  c.

Question 11

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Accepted Answer

The Federal Reserve System divides the n

Question 12

Which of the following is NOT included in M1?

Accepted Answer

A)  checking deposits owned by individuals 
B)  currency 
C)  traveler's checks 
D)  saving deposits 
A)  checking deposits owned by individuals 
B)  currency 
C)  traveler's checks 
D)  saving deposits

Question 13

Suppose that the money multiplier is 3. If the monetary base decreases by $2 million, the quantity of money will

Accepted Answer

A)  decrease by $6 million. 
B)  decrease by $666,667. 
C)  increase by $666,667. 
D)  increase by $6 million. 
A)  decrease by $6 million. 
B)  decrease by $666,667. 
C)  increase by $666,667. 
D)  increase by $6 million.

Question 14

Which of the following decreases the demand for money?

Accepted Answer

A)  a decrease in the cost of printing money 
B)  an increase in the price level 
C)  a decrease in real GDP 
D)  an increase in the quantity of money 
A)  a decrease in the cost of printing money 
B)  an increase in the price level 
C)  a decrease in real GDP 
D)  an increase in the quantity of money

Question 15

Explain what is included in M1 and M2. Is all of M1 money? Is all of M2 money?

Accepted Answer

M1 is equal to the sum of currency outsi

Question 16

Describe how financial innovation has affected the demand for money.

Accepted Answer

Financial innovation is the development

Question 17

Which of the following counts as part of money?

Accepted Answer

A)  $10,000 of corporate bonds 
B)  $10,000 in a checking account 
C)  $10,000 of gold bars 
D)  $10,000 of government bonds 
A)  $10,000 of corporate bonds 
B)  $10,000 in a checking account 
C)  $10,000 of gold bars 
D)  $10,000 of government bonds

Question 18

According to the quantity theory of money,

Accepted Answer

A)  a decrease in the quantity of money will decrease the price level. 
B)  a decrease in the quantity of money will decrease the velocity of circulation. 
C)  an increase in the quantity of money will decrease real GDP. 
D)  an increase in the quantity of money will increase real GDP. 
A)  a decrease in the quantity of money will decrease the price level. 
B)  a decrease in the quantity of money will decrease the velocity of circulation. 
C)  an increase in the quantity of money will decrease real GDP. 
D)  an increase in the quantity of money will increase real GDP.

Question 19

Which of the following applies to the use of money as a unit of account?
I. A unit of account is an agreed measure for stating the prices of goods and services.
II. Using money as a unit of account creates a simplified pricing system.
III. Economies choose many goods as units of account.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  I and III 
A)  I only 
B)  II only 
C)  I and II 
D)  I and III

Question 20

When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .

Accepted Answer

A)  decreases; increases 
B)  increases; decreases 
C)  stays the same; decreases 
D)  increases; stays the same 
A)  decreases; increases 
B)  increases; decreases 
C)  stays the same; decreases 
D)  increases; stays the same

Control of the nation's quantity of money is handled by

When real GDP increases, people demand

Credit cards are NOT money because they

Suppose that the money multiplier is 4. If the monetary base decreases by $2 million, the quantity of money will

Which of the following decreases the demand for nominal money?

The quantity theory of money states that

According to the quantity theory of money, inflation causes an increase in the money supply.

The inflation rate in Venezuela has increased between 2005 and 2008, rising from 14 percent per year to 37 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to 5 percent per year. The quantity theory of money

If the desired reserve ratio rises, the money multiplier

-In the above figure, suppose the economy is initially at point a. If the interest rate increases, there is a movement to point such as

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Which of the following is NOT included in M1?

Suppose that the money multiplier is 3. If the monetary base decreases by $2 million, the quantity of money will

Which of the following decreases the demand for money?

Explain what is included in M1 and M2. Is all of M1 money? Is all of M2 money?

Describe how financial innovation has affected the demand for money.

Which of the following counts as part of money?

According to the quantity theory of money,

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

Control of the nation's quantity of money is handled by

When real GDP increases, people demand

Credit cards are NOT money because they

Suppose that the money multiplier is 4. If the monetary base decreases by $2 million, the quantity of money will

Which of the following decreases the demand for nominal money?

The quantity theory of money states that

According to the quantity theory of money, inflation causes an increase in the money supply.

The inflation rate in Venezuela has increased between 2005 and 2008, rising from 14 percent per year to 37 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to 5 percent per year. The quantity theory of money

If the desired reserve ratio rises, the money multiplier

-In the above figure, suppose the economy is initially at point a. If the interest rate increases, there is a movement to point such as

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

Which of the following is NOT included in M1?

Suppose that the money multiplier is 3. If the monetary base decreases by $2 million, the quantity of money will

Which of the following decreases the demand for money?

Explain what is included in M1 and M2. Is all of M1 money? Is all of M2 money?

Describe how financial innovation has affected the demand for money.

Which of the following counts as part of money?

According to the quantity theory of money,

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

When the interest rate falls in the money market, the quantity of money demanded and the quantity of money supplied .

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters