Question 1

Figure 10.1  
-In Figure 10.1, if money demand decreases then:

Accepted Answer

A) the equilibrium price level rises. 
B) the equilibrium prices level falls. 
C) the money supply rises. 
D) the money supply falls. 
A) the equilibrium price level rises. 
B) the equilibrium prices level falls. 
C) the money supply rises. 
D) the money supply falls.

Question 2

The demand for money is:

Accepted Answer

A) negatively related to the price level. 
B) negatively related to the interest rate. 
C) negatively related to real GDP. 
D) all of the above. 
A) negatively related to the price level. 
B) negatively related to the interest rate. 
C) negatively related to real GDP. 
D) all of the above.

Question 3

When households reduce their average money balances, they

Accepted Answer

A) purchase more goods. 
B) they earn less interest. 
C) incur more opportunity costs. 
D) incur more transaction costs. 
A) purchase more goods. 
B) they earn less interest. 
C) incur more opportunity costs. 
D) incur more transaction costs.

Question 4

The demand for money is:

Accepted Answer

A) positively related to the price level. 
B) negatively related to the interest rate. 
C) positively related to real GDP. 
D) all of the above. 
A) positively related to the price level. 
B) negatively related to the interest rate. 
C) positively related to real GDP. 
D) all of the above.

Question 5

US M2 money includes:

Accepted Answer

A) currency. 
B) demand deposits 
C) small time deposits. 
D) all of the above. 
A) currency. 
B) demand deposits 
C) small time deposits. 
D) all of the above.

Question 6

US M1 money includes:

Accepted Answer

A) savings deposits. 
B) checkable deposits. 
C) time deposits. 
D) all of the above. 
A) savings deposits. 
B) checkable deposits. 
C) time deposits. 
D) all of the above.

Question 7

Real money demand is:

Accepted Answer

A) determined by the central bank. 
B) money demand after taxes. 
C) the purchasing power of money balances. 
D) all of the above. 
A) determined by the central bank. 
B) money demand after taxes. 
C) the purchasing power of money balances. 
D) all of the above.

Question 8

Money is different from other assets like capital and bonds in that:

Accepted Answer

A) money has intrinsic value. 
B) money pays a higher rate of interest. 
C) capital and bonds are better long term stores of value. 
D) all of the above. 
A) money has intrinsic value. 
B) money pays a higher rate of interest. 
C) capital and bonds are better long term stores of value. 
D) all of the above.

Question 9

Economies of scale in cash management means:

Accepted Answer

A) at a higher income household's hold more money as a proportion of their income. 
B) at lower incomes household's hold more money as a proportion of their income 
C) the proportion of income held is not affected by household income. 
D) at lower income households hold less money as a proportion of their income. 
A) at a higher income household's hold more money as a proportion of their income. 
B) at lower incomes household's hold more money as a proportion of their income 
C) the proportion of income held is not affected by household income. 
D) at lower income households hold less money as a proportion of their income.

Question 10

Empirically, the price level is:

Accepted Answer

A) procyclical as we would expect if the monetary authority does not vary the money with the business cycle. 
B) procyclical as we would expect if the monetary authority varies the money supply with the business cycle. 
C) countercyclical as we would expect if the monetary authority does not vary much the money supply with the business cycle. 
D) countercyclical as we would expect if the monetary authority varies the money supply with the business cycle. 
A) procyclical as we would expect if the monetary authority does not vary the money with the business cycle. 
B) procyclical as we would expect if the monetary authority varies the money supply with the business cycle. 
C) countercyclical as we would expect if the monetary authority does not vary much the money supply with the business cycle. 
D) countercyclical as we would expect if the monetary authority varies the money supply with the business cycle.

Question 11

Real money demand is:

Accepted Answer

A) L(Y, i). 
B) equal to the money supply. 
C) P • L(Y, i). 
D) all of the above. 
A) L(Y, i). 
B) equal to the money supply. 
C) P • L(Y, i). 
D) all of the above.

Question 12

Figure 10.1  
-In Figure 11.1 if real GDP, Y, were to increase, then

Accepted Answer

A) money demand decreases and the price level increases. 
B) money demand increases and the price level decreases. 
C) the money supply and the price level would increase. 
D) the money supply and the price level would decrease. 
A) money demand decreases and the price level increases. 
B) money demand increases and the price level decreases. 
C) the money supply and the price level would increase. 
D) the money supply and the price level would decrease.

Question 13

What is the money demand function and what is the direction of influence of the variables on money demand?

Accepted Answer

The money demand function is: M^d = P • L

Question 14

Money demand and the money supply are brought into equilibrium by:

Accepted Answer

A) real GDP adjusting. 
B) the price level adjusting. 
C) the interest rate adjusting. 
D) the real wage rate adjusting. 
A) real GDP adjusting. 
B) the price level adjusting. 
C) the interest rate adjusting. 
D) the real wage rate adjusting.

Question 15

During a recession,

Accepted Answer

A) the interest rate and real GDP fall tending to cause money demand to fall. 
B) the interest rate and real GDP rise tending to cause money demand to rise. 
C) the interest rate falls tending to cause money demand to rise, but is at least partly offset by real GDP falling tending to cause money demand to fall. 
D) the interest rate rising and real GDP falling tend to cause money demand to rise. 
A) the interest rate and real GDP fall tending to cause money demand to fall. 
B) the interest rate and real GDP rise tending to cause money demand to rise. 
C) the interest rate falls tending to cause money demand to rise, but is at least partly offset by real GDP falling tending to cause money demand to fall. 
D) the interest rate rising and real GDP falling tend to cause money demand to rise.

Question 16

If the money supply doubles, then

Accepted Answer

A) GDP doubles. 
B) the price level doubles. 
C) the interest rate, i, doubles. 
D) none of the above. 
A) GDP doubles. 
B) the price level doubles. 
C) the interest rate, i, doubles. 
D) none of the above.

Question 17

Real money demand is:

Accepted Answer

A) Md/P. 
B) a function of real GDP and the interest rate. 
C) the purchasing power of money balances. 
D) all of the above. 
A) Md/P. 
B) a function of real GDP and the interest rate. 
C) the purchasing power of money balances. 
D) all of the above.

Question 18

Money is different from other assets like capital and bonds in that:

Accepted Answer

A) money does not pay interest. 
B) money has intrinsic value. 
C) money is a better long term store of value. 
D) all of the above. 
A) money does not pay interest. 
B) money has intrinsic value. 
C) money is a better long term store of value. 
D) all of the above.

Question 19

What would happen to money demand, the money supply and the price level if there were a positive shock to production?

Accepted Answer

Since money demand = P • L(Y, i), a posi

Question 20

The neutrality of money implies:

Accepted Answer

A) one time changes in real variables do not affect money demand. 
B) one time changes in the money supply do not affect real variables. 
C) one time changes in nominal variables do not affect money demand. 
D) one time changes in the money supply do not affect nominal variables. 
A) one time changes in real variables do not affect money demand. 
B) one time changes in the money supply do not affect real variables. 
C) one time changes in nominal variables do not affect money demand. 
D) one time changes in the money supply do not affect nominal variables.

Figure 10.1 -In Figure 10.1, if money demand decreases then:

The demand for money is:

When households reduce their average money balances, they

The demand for money is:

US M2 money includes:

US M1 money includes:

Real money demand is:

Money is different from other assets like capital and bonds in that:

Economies of scale in cash management means:

Empirically, the price level is:

Real money demand is:

Figure 10.1 -In Figure 11.1 if real GDP, Y, were to increase, then

What is the money demand function and what is the direction of influence of the variables on money demand?

Money demand and the money supply are brought into equilibrium by:

During a recession,

If the money supply doubles, then

Real money demand is:

Money is different from other assets like capital and bonds in that:

What would happen to money demand, the money supply and the price level if there were a positive shock to production?

The neutrality of money implies:

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

Inflation, Money Growth, and Interest Rates

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 11: The Demand for Money and the Price Level

Figure 10.1 -In Figure 10.1, if money demand decreases then:

The demand for money is:

When households reduce their average money balances, they

The demand for money is:

US M2 money includes:

US M1 money includes:

Real money demand is:

Money is different from other assets like capital and bonds in that:

Economies of scale in cash management means:

Empirically, the price level is:

Real money demand is:

Figure 10.1 -In Figure 11.1 if real GDP, Y, were to increase, then

What is the money demand function and what is the direction of influence of the variables on money demand?

Money demand and the money supply are brought into equilibrium by:

During a recession,

If the money supply doubles, then

Real money demand is:

Money is different from other assets like capital and bonds in that:

What would happen to money demand, the money supply and the price level if there were a positive shock to production?

The neutrality of money implies:

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

Inflation, Money Growth, and Interest Rates

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