Question 1

The supply of money is depicted as an upward sloping line that depends directly on the interest rate.

Accepted Answer

A) True 
 B)False

Question 2

When the Fed purchases U.S.government securities through the open market,the money supply:

Accepted Answer

A) increases,the interest rate falls,and the quantity of money demanded increases. 
B) falls,the interest rate falls,and the quantity of money demanded increases. 
C) increases,the interest rate increases,and the quantity of money demanded increases. 
D) falls,the interest rate increases,and the quantity of money demanded falls. 
E) falls,the interest rate falls,and the quantity of money demanded falls. 
A) increases,the interest rate falls,and the quantity of money demanded increases. 
B) falls,the interest rate falls,and the quantity of money demanded increases. 
C) increases,the interest rate increases,and the quantity of money demanded increases. 
D) falls,the interest rate increases,and the quantity of money demanded falls. 
E) falls,the interest rate falls,and the quantity of money demanded falls.

Question 3

Which of the following variables are assumed to be more or less constant in the quantity theory of money equation?

Accepted Answer

A) The price level 
B) The real GDP 
C) The money supply 
D) The nominal GDP 
E) The velocity of money 
A) The price level 
B) The real GDP 
C) The money supply 
D) The nominal GDP 
E) The velocity of money

Question 4

The opportunity cost of holding money increases when:

Accepted Answer

A) the interest rate rises. 
B) the interest rate falls. 
C) the price level falls. 
D) nominal GDP rises. 
E) nominal GDP falls. 
A) the interest rate rises. 
B) the interest rate falls. 
C) the price level falls. 
D) nominal GDP rises. 
E) nominal GDP falls.

Question 5

Monetary policy will be effective in changing the gross domestic product of a nation only if:

Accepted Answer

A) planned investment expenditures are autonomous. 
B) planned investment expenditures are sensitive to interest rates. 
C) interest rates are unresponsive to changes in money supply. 
D) interest rates are sensitive to changes in the price level. 
A) planned investment expenditures are autonomous. 
B) planned investment expenditures are sensitive to interest rates. 
C) interest rates are unresponsive to changes in money supply. 
D) interest rates are sensitive to changes in the price level.

Question 6

An increase in the expected inflation rate causes:

Accepted Answer

A) the velocity of money to increase. 
B) the velocity of money to decrease. 
C) the actual inflation rate to fall. 
D) the actual price level to decrease. 
E) the money supply to increase. 
A) the velocity of money to increase. 
B) the velocity of money to decrease. 
C) the actual inflation rate to fall. 
D) the actual price level to decrease. 
E) the money supply to increase.

Question 7

If the money supply is $1,000,the price level is 3,and real income (or output)is $5,000,then the velocity of money is _____.

Accepted Answer

A) 0.2 
B) 0.6 
C) 1.67 
D) 5 
E) 15 
A) 0.2 
B) 0.6 
C) 1.67 
D) 5 
E) 15

Question 8

To eliminate a recessionary gap,the Fed can:

Accepted Answer

A) increase the money supply as it will increase the interest rate and investment. 
B) increase the money supply as it will decrease the interest rate and increase investment. 
C) decrease the money supply as it will increase the interest rate and investment. 
D) decrease the money supply as it will decrease the interest rate and investment. 
E) decrease the money supply as it will increase the interest rate and decrease investment. 
A) increase the money supply as it will increase the interest rate and investment. 
B) increase the money supply as it will decrease the interest rate and increase investment. 
C) decrease the money supply as it will increase the interest rate and investment. 
D) decrease the money supply as it will decrease the interest rate and investment. 
E) decrease the money supply as it will increase the interest rate and decrease investment.

Question 9

Which of the following statements about the velocity of money in the U.S.is correct?

Accepted Answer

A) From 1915 to 1947,the velocity of M1 increased. 
B) From 1947 to 1973,the velocity of M1 decreased. 
C) The growth in the velocity of money was steady in the 1970s. 
D) The velocity of money has remained more or less stable post 1980s. 
E) ATM machines and credit cards have increased the velocity of money. 
A) From 1915 to 1947,the velocity of M1 increased. 
B) From 1947 to 1973,the velocity of M1 decreased. 
C) The growth in the velocity of money was steady in the 1970s. 
D) The velocity of money has remained more or less stable post 1980s. 
E) ATM machines and credit cards have increased the velocity of money.

Question 10

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

Accepted Answer

A) True 
 B)False

Question 11

According to the quantity theory of money,if velocity of money is constant,a 5 percent increase in money supply will lead to a 0.25 percent increase in nominal GDP.

Accepted Answer

A) True 
 B)False

Question 12

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

Accepted Answer

A) True 
 B)False

Question 13

For a given increase in aggregate demand,the steeper the short-run aggregate supply curve:

Accepted Answer

A) the larger the increase in investment expenditure. 
B) the smaller the increase in the price level. 
C) the smaller the increase in real GDP. 
D) the larger the increase in real GDP. 
E) the smaller the increase in real interest rate. 
A) the larger the increase in investment expenditure. 
B) the smaller the increase in the price level. 
C) the smaller the increase in real GDP. 
D) the larger the increase in real GDP. 
E) the smaller the increase in real interest rate.

Question 14

Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

Accepted Answer

A) The demand for money will decrease. 
B) The supply of money will increase. 
C) The rate of interest will decrease. 
D) The total investment spending in the economy will increase. 
E) The rate of interest will increase. 
A) The demand for money will decrease. 
B) The supply of money will increase. 
C) The rate of interest will decrease. 
D) The total investment spending in the economy will increase. 
E) The rate of interest will increase.

Question 15

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

Accepted Answer

A) constant price level. 
B) slowly increasing price level. 
C) slowly decreasing price level. 
D) stable 4 percent growth in real GDP. 
E) stable 4 percent growth in nominal GDP. 
A) constant price level. 
B) slowly increasing price level. 
C) slowly decreasing price level. 
D) stable 4 percent growth in real GDP. 
E) stable 4 percent growth in nominal GDP.

Question 16

In the long run,increases in the money supply increase the economy's potential output level.

Accepted Answer

A) True 
 B)False

Question 17

If the money supply is $600,the price level is $2,and real GDP is $300,the velocity of money is _____.

Accepted Answer

A) 1 
B) 150 
C) 300 
D) 600 
E) 1,200 
A) 1 
B) 150 
C) 300 
D) 600 
E) 1,200

Question 18

Which of the following is an example of an expansionary monetary policy?

Accepted Answer

A) A reduction in government purchases of goods and services 
B) An increase in the discount rate 
C) An open market sale of U.S.government securities 
D) A reduction in the required reserve ratio 
E) A tax cut 
A) A reduction in government purchases of goods and services 
B) An increase in the discount rate 
C) An open market sale of U.S.government securities 
D) A reduction in the required reserve ratio 
E) A tax cut

Question 19

A wider use of charge accounts and credit cards have reduced the demand for "walking-around" money.

Accepted Answer

A) True 
 B)False

Question 20

A movement upward and to the left along the money demand curve is caused by:

Accepted Answer

A) an increase in the interest rate. 
B) a decrease in the interest rate. 
C) a decrease in real GDP. 
D) an increase in real GDP. 
E) an increase in the average price level. 
A) an increase in the interest rate. 
B) a decrease in the interest rate. 
C) a decrease in real GDP. 
D) an increase in real GDP. 
E) an increase in the average price level.

The supply of money is depicted as an upward sloping line that depends directly on the interest rate.

When the Fed purchases U.S.government securities through the open market,the money supply:

Which of the following variables are assumed to be more or less constant in the quantity theory of money equation?

The opportunity cost of holding money increases when:

Monetary policy will be effective in changing the gross domestic product of a nation only if:

An increase in the expected inflation rate causes:

If the money supply is $1,000,the price level is 3,and real income (or output)is $5,000,then the velocity of money is _____.

To eliminate a recessionary gap,the Fed can:

Which of the following statements about the velocity of money in the U.S.is correct?

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

According to the quantity theory of money,if velocity of money is constant,a 5 percent increase in money supply will lead to a 0.25 percent increase in nominal GDP.

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

For a given increase in aggregate demand,the steeper the short-run aggregate supply curve:

Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

In the long run,increases in the money supply increase the economy's potential output level.

If the money supply is $600,the price level is $2,and real GDP is $300,the velocity of money is _____.

Which of the following is an example of an expansionary monetary policy?

A wider use of charge accounts and credit cards have reduced the demand for "walking-around" money.

A movement upward and to the left along the money demand curve is caused by:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 15: Monetary Theory and Policy

The supply of money is depicted as an upward sloping line that depends directly on the interest rate.

When the Fed purchases U.S.government securities through the open market,the money supply:

Which of the following variables are assumed to be more or less constant in the quantity theory of money equation?

The opportunity cost of holding money increases when:

Monetary policy will be effective in changing the gross domestic product of a nation only if:

An increase in the expected inflation rate causes:

If the money supply is $1,000,the price level is 3,and real income (or output)is $5,000,then the velocity of money is _____.

To eliminate a recessionary gap,the Fed can:

Which of the following statements about the velocity of money in the U.S.is correct?

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

According to the quantity theory of money,if velocity of money is constant,a 5 percent increase in money supply will lead to a 0.25 percent increase in nominal GDP.

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

For a given increase in aggregate demand,the steeper the short-run aggregate supply curve:

Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

In the long run,increases in the money supply increase the economy's potential output level.

If the money supply is $600,the price level is $2,and real GDP is $300,the velocity of money is _____.

Which of the following is an example of an expansionary monetary policy?

A wider use of charge accounts and credit cards have reduced the demand for "walking-around" money.

A movement upward and to the left along the money demand curve is caused by:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters