Question 1

When the rate of growth rate of money is constant:

Accepted Answer

A) the inflation rate is growing. 
B) the nominal interest rate is declining. 
C) real money balance is constant over time. 
D) all of the above. 
A) the inflation rate is growing. 
B) the nominal interest rate is declining. 
C) real money balance is constant over time. 
D) all of the above.

Question 2

If the price level last year was 135 and this year is 142, then the inflation rate between last period and this period was:

Accepted Answer

A) 4.9%. 
B) 7%. 
C) 5.1% 
D) 5.2%. 
A) 4.9%. 
B) 7%. 
C) 5.1% 
D) 5.2%.

Question 3

If the inflation rate is 3% and the nominal interest rate is 5% and the money growth rate increases to 5%, then we would expect real money balances to:

Accepted Answer

A) fall. 
B) increase. 
C) remain unchanged. 
D) to fluctuate. 
A) fall. 
B) increase. 
C) remain unchanged. 
D) to fluctuate.

Question 4

The real interest rate is

Accepted Answer

A) the nominal interest rate plus the expected inflation rate. 
B) the nominal interest rate divided by the expected inflation rate. 
C) the nominal interest rate less the expected inflation. 
D) the expected inflation rate divided by the nominal rate of interest. 
A) the nominal interest rate plus the expected inflation rate. 
B) the nominal interest rate divided by the expected inflation rate. 
C) the nominal interest rate less the expected inflation. 
D) the expected inflation rate divided by the nominal rate of interest.

Question 5

If the nominal interest rate is 5% and the expected inflation rate is 2%, then the expected real rate of interest is:

Accepted Answer

A) 7%. 
B) 3% 
C) 2.5%. 
D) -3%. 
A) 7%. 
B) 3% 
C) 2.5%. 
D) -3%.

Question 6

A decrease in the money growth rate in the market clearing model causes:

Accepted Answer

A) an increase in the nominal interest rate. 
B) a decrease in money demand. 
C) a decrease in the price level. 
D) all of the above. 
A) an increase in the nominal interest rate. 
B) a decrease in money demand. 
C) a decrease in the price level. 
D) all of the above.

Question 7

When the rate of growth rate of money is constant:

Accepted Answer

A) the inflation rate equals the growth rate of money. 
B) the nominal interest rate is the real rate of interest plus the growth rate of money. 
C) real money balance is fixed over time. 
D) all of the above. 
A) the inflation rate equals the growth rate of money. 
B) the nominal interest rate is the real rate of interest plus the growth rate of money. 
C) real money balance is fixed over time. 
D) all of the above.

Question 8

When the rate of growth rate of money is constant:

Accepted Answer

A) the inflation rate equals the growth rate of money. 
B) the nominal interest rate rises. 
C) real money balance is declining. 
D) all of the above. 
A) the inflation rate equals the growth rate of money. 
B) the nominal interest rate rises. 
C) real money balance is declining. 
D) all of the above.

Question 9

A decrease in the money growth rate in the market clearing model causes:

Accepted Answer

A) a decrease in the nominal interest rate. 
B) an increase in money demand. 
C) a decrease in the price level. 
D) all of the above. 
A) a decrease in the nominal interest rate. 
B) an increase in money demand. 
C) a decrease in the price level. 
D) all of the above.

Question 10

An increase in the money growth rate in the market clearing model causes:

Accepted Answer

A) a decrease in the nominal interest rate. 
B) a decrease in money demand. 
C) an increase in consumption. 
D) all of the above. 
A) a decrease in the nominal interest rate. 
B) a decrease in money demand. 
C) an increase in consumption. 
D) all of the above.

Question 11

An indexed bond is one:

Accepted Answer

A) that pays a real rate of interest. 
B) that is indexed to the economic growth rate. 
C) that is indexed to the expected inflation rate. 
D) that pays a nominal rate of interest. 
A) that pays a real rate of interest. 
B) that is indexed to the economic growth rate. 
C) that is indexed to the expected inflation rate. 
D) that pays a nominal rate of interest.

Question 12

When the real interest rate, r, can differ from the nominal interest rate, i, then:

Accepted Answer

A) money demand depends on the real rate of interest. 
B) consumption depends on the real rate of interest. 
C) consumption depends on the nominal rate of interest. 
D) money demand no longer depends on any interest rate. 
A) money demand depends on the real rate of interest. 
B) consumption depends on the real rate of interest. 
C) consumption depends on the nominal rate of interest. 
D) money demand no longer depends on any interest rate.

Question 13

The real return on money is zero.

Accepted Answer

A) True 
 B)False

Question 14

If the inflation rate is 2% and the nominal interest rate is 4% and the money growth rate increases to 3%, then we would expect the nominal interest rate to be:

Accepted Answer

A) 6%. 
B) zero. 
C) 5%. 
D) 2%. 
A) 6%. 
B) zero. 
C) 5%. 
D) 2%.

Question 15

When the rate of growth rate of money is constant:

Accepted Answer

A) the inflation rate is growing. 
B) the nominal interest rate is the real rate of interest plus the growth rate of money. 
C) real money balance is declining. 
D) all of the above. 
A) the inflation rate is growing. 
B) the nominal interest rate is the real rate of interest plus the growth rate of money. 
C) real money balance is declining. 
D) all of the above.

Question 16

In the market clearing model money growth is modeled as:

Accepted Answer

A) random. 
B) lump-sum transfers. 
C) via the purchase of bonds. 
D) all of the above. 
A) random. 
B) lump-sum transfers. 
C) via the purchase of bonds. 
D) all of the above.

Question 17

An increase in the money growth rate in the market clearing model causes:

Accepted Answer

A) an increase in the nominal interest rate. 
B) an increase in money demand. 
C) a decrease in the price level. 
D) all of the above. 
A) an increase in the nominal interest rate. 
B) an increase in money demand. 
C) a decrease in the price level. 
D) all of the above.

Question 18

In the market clearing model an increase in the money growth rate leads to a decrease in the nominal interest rate.

Accepted Answer

A) True 
 B)False

Question 19

What is the government revenue from printing money?

Accepted Answer

The nominal revenue from printing money

Question 20

A decrease in the money growth rate in the market clearing model causes:

Accepted Answer

A) a decrease in the nominal interest rate. 
B) a decrease in money demand. 
C) an increase in the price level. 
D) all of the above. 
A) a decrease in the nominal interest rate. 
B) a decrease in money demand. 
C) an increase in the price level. 
D) all of the above.

When the rate of growth rate of money is constant:

If the price level last year was 135 and this year is 142, then the inflation rate between last period and this period was:

If the inflation rate is 3% and the nominal interest rate is 5% and the money growth rate increases to 5%, then we would expect real money balances to:

The real interest rate is

If the nominal interest rate is 5% and the expected inflation rate is 2%, then the expected real rate of interest is:

A decrease in the money growth rate in the market clearing model causes:

When the rate of growth rate of money is constant:

When the rate of growth rate of money is constant:

A decrease in the money growth rate in the market clearing model causes:

An increase in the money growth rate in the market clearing model causes:

An indexed bond is one:

When the real interest rate, r, can differ from the nominal interest rate, i, then:

The real return on money is zero.

If the inflation rate is 2% and the nominal interest rate is 4% and the money growth rate increases to 3%, then we would expect the nominal interest rate to be:

When the rate of growth rate of money is constant:

In the market clearing model money growth is modeled as:

An increase in the money growth rate in the market clearing model causes:

In the market clearing model an increase in the money growth rate leads to a decrease in the nominal interest rate.

What is the government revenue from printing money?

A decrease in the money growth rate in the market clearing model causes:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters

Exam 12: Inflation, Money Growth, and Interest Rates

When the rate of growth rate of money is constant:

If the price level last year was 135 and this year is 142, then the inflation rate between last period and this period was:

If the inflation rate is 3% and the nominal interest rate is 5% and the money growth rate increases to 5%, then we would expect real money balances to:

The real interest rate is

If the nominal interest rate is 5% and the expected inflation rate is 2%, then the expected real rate of interest is:

A decrease in the money growth rate in the market clearing model causes:

When the rate of growth rate of money is constant:

When the rate of growth rate of money is constant:

A decrease in the money growth rate in the market clearing model causes:

An increase in the money growth rate in the market clearing model causes:

An indexed bond is one:

When the real interest rate, r, can differ from the nominal interest rate, i, then:

The real return on money is zero.

If the inflation rate is 2% and the nominal interest rate is 4% and the money growth rate increases to 3%, then we would expect the nominal interest rate to be:

When the rate of growth rate of money is constant:

In the market clearing model money growth is modeled as:

An increase in the money growth rate in the market clearing model causes:

In the market clearing model an increase in the money growth rate leads to a decrease in the nominal interest rate.

What is the government revenue from printing money?

A decrease in the money growth rate in the market clearing model causes:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

World Markets in Goods and Credit

Exchange Rates

Filters