Question 1

The price of a Honda Accord

Accepted Answer

A) and the price of a Honda Accord divided by the price of a Honda Civic are both real variables. 
B) and the price of a Honda Accord divided by the price of Honda Civic are both nominal variables. 
C) is a real variable, and the price of a Honda Accord divided by a Honda Civic is a nominal variable. 
D) is a nominal variable and the price of a Honda Accord divided by the price of a Honda Civic is a real variable. 
A) and the price of a Honda Accord divided by the price of a Honda Civic are both real variables. 
B) and the price of a Honda Accord divided by the price of Honda Civic are both nominal variables. 
C) is a real variable, and the price of a Honda Accord divided by a Honda Civic is a nominal variable. 
D) is a nominal variable and the price of a Honda Accord divided by the price of a Honda Civic is a real variable.

Question 2

Inflation costs are minimized during periods of

Accepted Answer

A) ​hyperinflation. 
B) ​large, unexpected deflation. 
C) ​moderate inflation. 
D) rapid money growth. 
A) ​hyperinflation. 
B) ​large, unexpected deflation. 
C) ​moderate inflation. 
D) rapid money growth.

Question 3

According to the principle of monetary neutrality, a decrease in the money supply will not change

Accepted Answer

A) nominal GDP. 
B) the price level. 
C) unemployment. 
D) All of the above are correct. 
A) nominal GDP. 
B) the price level. 
C) unemployment. 
D) All of the above are correct.

Question 4

​Which of the following would decrease the value of money?

Accepted Answer

A) Money demand exceeds money supply 
B) ​The Federal Reserve sells government bonds 
C) The velocity of money decreases 
D) ​The price level decreases 
A) Money demand exceeds money supply 
B) ​The Federal Reserve sells government bonds 
C) The velocity of money decreases 
D) ​The price level decreases

Question 5

If P = 2 and Y = 1000, then which of the following pairs of values are possible?

Accepted Answer

A) M = $500, V = 4. 
B) M = $250, V = 8. 
C) M = $1,000, V = 2. 
D) All of the above are correct. 
A) M = $500, V = 4. 
B) M = $250, V = 8. 
C) M = $1,000, V = 2. 
D) All of the above are correct.

Question 6

Other things the same, an increase in velocity means that

Accepted Answer

A) transactions per dollar increase so the price level rises. 
B) transactions per dollar increase so the price level falls. 
C) transactions per dollar decrease so the price level rises. 
D) transactions per dollar decrease so the price level falls. 
A) transactions per dollar increase so the price level rises. 
B) transactions per dollar increase so the price level falls. 
C) transactions per dollar decrease so the price level rises. 
D) transactions per dollar decrease so the price level falls.

Question 7

Suppose that velocity rises while the money supply stays the same. It follows that

Accepted Answer

A) P x Y must rise. 
B) P x Y must fall. 
C) P x Y must be unchanged. 
D) the effects on P x Y are uncertain. 
A) P x Y must rise. 
B) P x Y must fall. 
C) P x Y must be unchanged. 
D) the effects on P x Y are uncertain.

Question 8

When the money market is drawn with the value of money on the vertical axis,

Accepted Answer

A) money demand slopes upward and money supply is horizontal. 
B) money demand slopes downward and money supply is horizontal. 
C) money demand slopes upward and money supply is vertical. 
D) money demand slopes downward and money supply is vertical. 
A) money demand slopes upward and money supply is horizontal. 
B) money demand slopes downward and money supply is horizontal. 
C) money demand slopes upward and money supply is vertical. 
D) money demand slopes downward and money supply is vertical.

Question 9

Suppose one year ago the price index was 120 and Maria purchased $20,000 worth of bonds. One year later the price index is 126. Maria redeems her bonds for $22,700 and is in a 40 percent tax bracket. What is Maria's real after-tax rate of interest to the nearest tenth of a percent?

Accepted Answer

A) 5.1 percent 
B) 3.1 percent 
C) 2.1 percent 
D) 2.4 percent 
A) 5.1 percent 
B) 3.1 percent 
C) 2.1 percent 
D) 2.4 percent

Question 10

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. Suppose the relevant money-demand curve is the one labeled MD1; also suppose the economy's real GDP is 20,000 for the year. If the money market is in equilibrium, then how many times per year is the typical dollar bill used to pay for a newly produced good or service?

Accepted Answer

A) 4 
B) 2 
C) 8 
D) 10 
A) 4 
B) 2 
C) 8 
D) 10

Question 11

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.  
-Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS1; also suppose the economy's real GDP is 30,000 for the year. If the money market is in equilibrium, then the velocity of money is approximately

Accepted Answer

A) 3.0 
B) 6.0 
C) 9.0 
D) 1.5 
A) 3.0 
B) 6.0 
C) 9.0 
D) 1.5

Question 12

Which movie is an allegory about late 19th century monetary policy?

Accepted Answer

A) The Wizard of Oz 
B) Mary Poppins 
C) It's a Wonderful Life 
D) Trading Places 
A) The Wizard of Oz 
B) Mary Poppins 
C) It's a Wonderful Life 
D) Trading Places

Question 13

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

Accepted Answer

A) The dollar price of jeans and the relative price of jeans are both nominal variables. 
B) The dollar price of jeans and the relative price of jeans are both real variables. 
C) The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. 
D) The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable. 
A) The dollar price of jeans and the relative price of jeans are both nominal variables. 
B) The dollar price of jeans and the relative price of jeans are both real variables. 
C) The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. 
D) The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable.

Question 14

In the U.S., taxes are paid on one's _____ gains/returns. Therefore, a _____ inflation rate encourages more saving.

Accepted Answer

The answer of In the U.S., taxes are paid on...

Question 15

When the money market is drawn with the value of money on the vertical axis, the value of money decreases if

Accepted Answer

A) either money demand or money supply shifts right. 
B) either money demand or money supply shifts left. 
C) money demand shifts right or money supply shifts left. 
D) money demand shifts left or money supply shifts right. 
A) either money demand or money supply shifts right. 
B) either money demand or money supply shifts left. 
C) money demand shifts right or money supply shifts left. 
D) money demand shifts left or money supply shifts right.

Question 16

An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?

Accepted Answer

Both the nominal and real valu

Question 17

Wealth is redistributed from debtors to creditors when inflation was expected to be

Accepted Answer

A) high and it turns out to be high. 
B) low and it turns out to be low. 
C) low and it turns out to be high. 
D) high and it turns out to be low. 
A) high and it turns out to be high. 
B) low and it turns out to be low. 
C) low and it turns out to be high. 
D) high and it turns out to be low.

Question 18

Hyperinflations are associated with governments printing money to finance expenditures.

Accepted Answer

A) True 
 B)False

Question 19

When we assume that the supply of money is a variable that the central bank controls, we

Accepted Answer

A) must then assume as well that the demand for money is not influenced by the value of money. 
B) must then assume as well that the price level is unrelated to the value of money. 
C) are ignoring the fact that, in the real world, households are also suppliers of money. 
D) are ignoring the complications introduced by the role of the banking system. 
A) must then assume as well that the demand for money is not influenced by the value of money. 
B) must then assume as well that the price level is unrelated to the value of money. 
C) are ignoring the fact that, in the real world, households are also suppliers of money. 
D) are ignoring the complications introduced by the role of the banking system.

Question 20

If money demand shifts right, the price level falls.

Accepted Answer

A) True 
 B)False

Exam 30: Money Growth and Inflation

The price of a Honda Accord

Inflation costs are minimized during periods of

According to the principle of monetary neutrality, a decrease in the money supply will not change

​Which of the following would decrease the value of money?

If P = 2 and Y = 1000, then which of the following pairs of values are possible?

Other things the same, an increase in velocity means that

Suppose that velocity rises while the money supply stays the same. It follows that

When the money market is drawn with the value of money on the vertical axis,

Suppose one year ago the price index was 120 and Maria purchased $20,000 worth of bonds. One year later the price index is 126. Maria redeems her bonds for $22,700 and is in a 40 percent tax bracket. What is Maria's real after-tax rate of interest to the nearest tenth of a percent?

Which movie is an allegory about late 19th century monetary policy?

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

In the U.S., taxes are paid on one's _____ gains/returns. Therefore, a _____ inflation rate encourages more saving.

When the money market is drawn with the value of money on the vertical axis, the value of money decreases if

An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?

Wealth is redistributed from debtors to creditors when inflation was expected to be

Hyperinflations are associated with governments printing money to finance expenditures.

When we assume that the supply of money is a variable that the central bank controls, we

If money demand shifts right, the price level falls.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Which of the following would decrease the value of money?

In the U.S., taxes are paid on one's _ gains/returns. Therefore, a _ inflation rate encourages more saving.