Question 1

The costs of changing price tags and price listings are known as

Accepted Answer

A) inflation-induced tax distortions. 
B) relative-price variability costs. 
C) shoeleather costs. 
D) menu costs. 
A) inflation-induced tax distortions. 
B) relative-price variability costs. 
C) shoeleather costs. 
D) menu costs.

Question 2

An increase in the price level means that a dollar buys __________ goods and services so the value of a dollar __________.

Accepted Answer

The answer of An increase in the price level means...

Question 3

The _____ interest rate tells you how fast the number of dollars in your bank account will rise over time, and it is the sum of the _____ interest rate and the _____.

Accepted Answer

nominal, r

Question 4

If P represents the price of goods and services measured in money, then 1/P is the value of money measured in terms of goods and services.

Accepted Answer

A) True 
 B)False

Question 5

In order to maintain stable prices, a central bank must

Accepted Answer

A) maintain low interest rates. 
B) keep unemployment low. 
C) tightly control the money supply. 
D) sell indexed bonds. 
A) maintain low interest rates. 
B) keep unemployment low. 
C) tightly control the money supply. 
D) sell indexed bonds.

Question 6

For a given real interest rate, an increase in the inflation rate reduces the after-tax real interest rate.

Accepted Answer

A) True 
 B)False

Question 7

In United States history there were long periods when most prices fell.

Accepted Answer

A) True 
 B)False

Question 8

The increase in the overall level of prices is known as _____.

Accepted Answer

The answer of The increase in the overall level of...

Question 9

To explain the long-run determinants of the price level and the inflation rate, most economists today rely on the

Accepted Answer

A) quantity theory of money. 
B) price-index theory of money. 
C) theory of hyperinflation. 
D) disequilibrium theory of money and inflation. 
A) quantity theory of money. 
B) price-index theory of money. 
C) theory of hyperinflation. 
D) disequilibrium theory of money and inflation.

Question 10

When the market for money is drawn with the value of money on the vertical axis and the quantity of money on the horizontal axis, the price level increases if money demand shifts

Accepted Answer

A) right and decreases if money supply shifts right. 
B) right and decreases if money supply shifts left. 
C) left and decreases if money supply shifts right. 
D) left and decreases if money supply shifts left. 
A) right and decreases if money supply shifts right. 
B) right and decreases if money supply shifts left. 
C) left and decreases if money supply shifts right. 
D) left and decreases if money supply shifts left.

Question 11

Relative-price variability

Accepted Answer

A) rises with inflation, leading to an improved allocation of resources. 
B) rises with inflation, leading to a misallocation of resources. 
C) falls with inflation, leading to an improved allocation of resources. 
D) falls with inflation, leading to a misallocation of resources. 
A) rises with inflation, leading to an improved allocation of resources. 
B) rises with inflation, leading to a misallocation of resources. 
C) falls with inflation, leading to an improved allocation of resources. 
D) falls with inflation, leading to a misallocation of resources.

Question 12

The inflation tax alters people's behavior and creates a deadweight loss. Explain.

Accepted Answer

Higher inflation gives people

Question 13

According to the quantity theory of money, an increase in the money supply causes the price level to _____ and the value of money to _____.

Accepted Answer

The answer of According to the quantity theory of money,...

Question 14

In the late 1800's deflation caused farmers to suffer as the fall in crop prices reduced their income and thus their ability to pay off their debts.

Accepted Answer

A) True 
 B)False

Question 15

If Y and V are constant and M doubles, the quantity equation implies that the price level

Accepted Answer

A) more than doubles. 
B) changes but less than doubles. 
C) doubles. 
D) does not change. 
A) more than doubles. 
B) changes but less than doubles. 
C) doubles. 
D) does not change.

Question 16

The source of all four classic hyperinflations was high rates of money growth.

Accepted Answer

A) True 
 B)False

Question 17

One year ago Sam purchased bonds for $100,000. He just sold them for $120,000. During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?

Accepted Answer

The answer of One year ago Sam purchased bonds for...

Question 18

According to the classical dichotomy and money neutrality, a doubling of the money supply, holding all else constant, causes prices to _____ and real GDP to _____.

Accepted Answer

double, re

Question 19

Does an increase in the inflation rate increase or decrease the amount of money people choose to hold at any given price level? What would an increase in the inflation rate do to money demand? What would this change in money demand do to the price level?

Accepted Answer

An increase in inflation reduc

Question 20

A decrease in the value of money __________ the quantity of money demanded. On a graph with the value of money on the vertical axis this effect on the value of money on quantity demanded is shown as ____________.

Accepted Answer

increases, a movemen

Exam 30: Money Growth and Inflation

The costs of changing price tags and price listings are known as

An increase in the price level means that a dollar buys __________ goods and services so the value of a dollar __________.

The _____ interest rate tells you how fast the number of dollars in your bank account will rise over time, and it is the sum of the _____ interest rate and the _____.

If P represents the price of goods and services measured in money, then 1/P is the value of money measured in terms of goods and services.

In order to maintain stable prices, a central bank must

For a given real interest rate, an increase in the inflation rate reduces the after-tax real interest rate.

In United States history there were long periods when most prices fell.

The increase in the overall level of prices is known as _____.

To explain the long-run determinants of the price level and the inflation rate, most economists today rely on the

When the market for money is drawn with the value of money on the vertical axis and the quantity of money on the horizontal axis, the price level increases if money demand shifts

Relative-price variability

The inflation tax alters people's behavior and creates a deadweight loss. Explain.

According to the quantity theory of money, an increase in the money supply causes the price level to _____ and the value of money to _____.

In the late 1800's deflation caused farmers to suffer as the fall in crop prices reduced their income and thus their ability to pay off their debts.

If Y and V are constant and M doubles, the quantity equation implies that the price level

The source of all four classic hyperinflations was high rates of money growth.

One year ago Sam purchased bonds for $100,000. He just sold them for $120,000. During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?

According to the classical dichotomy and money neutrality, a doubling of the money supply, holding all else constant, causes prices to _____ and real GDP to _____.

Does an increase in the inflation rate increase or decrease the amount of money people choose to hold at any given price level? What would an increase in the inflation rate do to money demand? What would this change in money demand do to the price level?

A decrease in the value of money __________ the quantity of money demanded. On a graph with the value of money on the vertical axis this effect on the value of money on quantity demanded is shown as ____________.

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 Nations 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

An increase in the price level means that a dollar buys goods and services so the value of a dollar .

The ___ interest rate tells you how fast the number of dollars in your bank account will rise over time, and it is the sum of the _ interest rate and the ___.

According to the quantity theory of money, an increase in the money supply causes the price level to _ and the value of money to _.

According to the classical dichotomy and money neutrality, a doubling of the money supply, holding all else constant, causes prices to _ and real GDP to _.

A decrease in the value of money the quantity of money demanded. On a graph with the value of money on the vertical axis this effect on the value of money on quantity demanded is shown as __.