Question 1

In the Lagos-Wright model

Accepted Answer

A) the buyer consumes in the CM and produces in the DM. 
B) the buyer consumes in the DM and produces in the CM. 
C) the buyer produces and consumer in both the CM and the DM. 
D) the seller produces and consumes in both the CM and the DM. 
E) the seller consumes in the DM and produces in the CM. 
A) the buyer consumes in the CM and produces in the DM. 
B) the buyer consumes in the DM and produces in the CM. 
C) the buyer produces and consumer in both the CM and the DM. 
D) the seller produces and consumes in both the CM and the DM. 
E) the seller consumes in the DM and produces in the CM. B

Question 2

The relationship between money growth and inflation was documented by

Accepted Answer

A) John Maynard Keynes. 
B) Milton Friedman and Anna Schwartz. 
C) Steve Poloz. 
D) Paul Samuelson. 
E) Thomas Friedman. 
A) John Maynard Keynes. 
B) Milton Friedman and Anna Schwartz. 
C) Steve Poloz. 
D) Paul Samuelson. 
E) Thomas Friedman. B

Question 3

A system that uses commodity-based paper currency was used in Canada

Accepted Answer

A) only after World War II. 
B) only during the 1960s and 1970s. 
C) only during World War II. 
D) only during the Great Depression. 
E) before 1929. 
A) only after World War II. 
B) only during the 1960s and 1970s. 
C) only during World War II. 
D) only during the Great Depression. 
E) before 1929. E

Question 4

In the Lagos-Wright model, an increase in the money growth rate

Accepted Answer

A) increases welfare. 
B) gets the economy closer to the Friedman rule. 
C) reduces the nominal interest rate. 
D) increases the nominal interest rate one-for-one. 
E) reduces the real interest rate. 
A) increases welfare. 
B) gets the economy closer to the Friedman rule. 
C) reduces the nominal interest rate. 
D) increases the nominal interest rate one-for-one. 
E) reduces the real interest rate.

Question 5

Market exchange is typically an exchange of goods for money as opposed to goods for goods because use of money solves the problem of

Accepted Answer

A) tax evasion. 
B) a coincidence of needs. 
C) the need for government intervention. 
D) the absence of a coincidence of wants. 
E) the absence of a double coincidence of wants. 
A) tax evasion. 
B) a coincidence of needs. 
C) the need for government intervention. 
D) the absence of a coincidence of wants. 
E) the absence of a double coincidence of wants.

Question 6

Problems with the use of commodity money include all of the following EXCEPT

Accepted Answer

A) there is an opportunity of fraud in the production of commodity money. 
B) there are several good substitutes. 
C) it carries a high opportunity cost because the commodity could not be diverted from other uses. 
D) it is expensive to produce. 
E) bits could be clipped off coins and melted down without detection. 
A) there is an opportunity of fraud in the production of commodity money. 
B) there are several good substitutes. 
C) it carries a high opportunity cost because the commodity could not be diverted from other uses. 
D) it is expensive to produce. 
E) bits could be clipped off coins and melted down without detection.

Question 7

The cheque-clearing system is

Accepted Answer

A) includes debit card transactions. 
B) only found in the United States. 
C) one mechanism by which banks carry out exchanges with each other. 
D) slowly being replaced by credit cards. 
E) one mechanism by which consumers carry out exchanges. 
A) includes debit card transactions. 
B) only found in the United States. 
C) one mechanism by which banks carry out exchanges with each other. 
D) slowly being replaced by credit cards. 
E) one mechanism by which consumers carry out exchanges.

Question 8

In equilibrium in the Lagos-Wright model

Accepted Answer

A) the inflation rate is equal to the money growth rate. 
B) the inflation rate is less than the money growth rate. 
C) the inflation rate is greater than the nominal interest rate. 
D) the inflation rate is always zero. 
E) the inflation rate is always negative. 
A) the inflation rate is equal to the money growth rate. 
B) the inflation rate is less than the money growth rate. 
C) the inflation rate is greater than the nominal interest rate. 
D) the inflation rate is always zero. 
E) the inflation rate is always negative.

Question 9

In the Lagos-Wright model, a Pareto optimal allocation has the property that

Accepted Answer

A) the marginal utility of consumption for the buyer is one. 
B) it is inefficient. 
C) consumption is equal for buyers and sellers. 
D) sellers get all the consumption goods. 
E) buyers get all the consumption goods. 
A) the marginal utility of consumption for the buyer is one. 
B) it is inefficient. 
C) consumption is equal for buyers and sellers. 
D) sellers get all the consumption goods. 
E) buyers get all the consumption goods.

Question 10

What are the costs of inflation?

Accepted Answer

Inflation in the long run is determined

Question 11

The Lagos-Wright model exhibits

Accepted Answer

A) bargaining in the centralized market (CM). 
B) a Phillips curve. 
C) neutrality of money growth. 
D) a backward-bending labour supply curve. 
E) the Fisher relation. 
A) bargaining in the centralized market (CM). 
B) a Phillips curve. 
C) neutrality of money growth. 
D) a backward-bending labour supply curve. 
E) the Fisher relation.

Question 12

The costs of anticipated inflation, as typically measured

Accepted Answer

A) are largest when the central bank adheres to a Friedman rule. 
B) are small at inflation rates of around 10%. 
C) fall over time, if the inflation persists. 
D) are large as long as inflation is positive. 
E) are small even when there is a hyperinflation. 
A) are largest when the central bank adheres to a Friedman rule. 
B) are small at inflation rates of around 10%. 
C) fall over time, if the inflation persists. 
D) are large as long as inflation is positive. 
E) are small even when there is a hyperinflation.

Question 13

In the Lagos-Wright model, limited commitment means that

Accepted Answer

A) the buyer can abscond on his or her debt. 
B) trade will not occur. 
C) the seller cannot commit to produce. 
D) the buyer cannot commit to consume. 
E) the seller will not produce for the buyer. 
A) the buyer can abscond on his or her debt. 
B) trade will not occur. 
C) the seller cannot commit to produce. 
D) the buyer cannot commit to consume. 
E) the seller will not produce for the buyer.

Question 14

In the Lagos-Wright model, there is no welfare loss from inflation if

Accepted Answer

A) inflation is equal to the nominal interest rate. 
B) inflation is zero. 
C) inflation is positive. 
D) the nominal interest rate is negative. 
E) the nominal interest rate is zero. 
A) inflation is equal to the nominal interest rate. 
B) inflation is zero. 
C) inflation is positive. 
D) the nominal interest rate is negative. 
E) the nominal interest rate is zero.

Question 15

A deflationary black hole

Accepted Answer

A) has been observed in Japan since 1995. 
B) occurred during the financial crisis in the United States. 
C) occurs when inflation is 2%. 
D) has no empirical or theoretical support. 
E) occurs when the central bank adheres to the Friedman rule. 
A) has been observed in Japan since 1995. 
B) occurred during the financial crisis in the United States. 
C) occurs when inflation is 2%. 
D) has no empirical or theoretical support. 
E) occurs when the central bank adheres to the Friedman rule.

Question 16

When the central bank adopts a Friedman rule

Accepted Answer

A) the nominal interest rate is zero. 
B) money is neutral. 
C) money growth is zero. 
D) inflation is zero. 
E) prices are stable. 
A) the nominal interest rate is zero. 
B) money is neutral. 
C) money growth is zero. 
D) inflation is zero. 
E) prices are stable.

Question 17

In the contemporary Canadian economy, the best example of fiat money would be

Accepted Answer

A) coins issued by the Bank of Canada. 
B) the stock of notes issued by the Bank of Canada. 
C) deposits at all depository institutions. 
D) the stock of notes in the foreign exchange market. 
E) deposits at chartered banks, but not deposits at other depository institutions. 
A) coins issued by the Bank of Canada. 
B) the stock of notes issued by the Bank of Canada. 
C) deposits at all depository institutions. 
D) the stock of notes in the foreign exchange market. 
E) deposits at chartered banks, but not deposits at other depository institutions.

Question 18

The double coincidence of wants problem is solved by

Accepted Answer

A) the use of money. 
B) credit markets. 
C) specialization. 
D) the barter system. 
E) government intervention. 
A) the use of money. 
B) credit markets. 
C) specialization. 
D) the barter system. 
E) government intervention.

Question 19

In the Lagos-Wright model, if money growth decreases, then

Accepted Answer

A) consumption of buyers falls, consumption of sellers rises, and the nominal interest rate falls. 
B) consumption of buyers falls, consumption of sellers falls, and the nominal interest rate rises. 
C) consumption of buyers rises, consumption of sellers rises, and the nominal interest rate falls. 
D) consumption of buyers falls, consumption of sellers falls, and the nominal interest rate falls. 
E) consumption of buyers rises, consumption of sellers rises, and the nominal interest rate rises. 
A) consumption of buyers falls, consumption of sellers rises, and the nominal interest rate falls. 
B) consumption of buyers falls, consumption of sellers falls, and the nominal interest rate rises. 
C) consumption of buyers rises, consumption of sellers rises, and the nominal interest rate falls. 
D) consumption of buyers falls, consumption of sellers falls, and the nominal interest rate falls. 
E) consumption of buyers rises, consumption of sellers rises, and the nominal interest rate rises.

Question 20

A system that uses commodity-backed paper currency is most like a system that

Accepted Answer

A) uses fiat money. 
B) primarily relied on financial intermediaries. 
C) uses circulating private bank notes. 
D) uses commodity money. 
E) primarily relies on transaction deposits at banks. 
A) uses fiat money. 
B) primarily relied on financial intermediaries. 
C) uses circulating private bank notes. 
D) uses commodity money. 
E) primarily relies on transaction deposits at banks.

In the Lagos-Wright model

The relationship between money growth and inflation was documented by

A system that uses commodity-based paper currency was used in Canada

In the Lagos-Wright model, an increase in the money growth rate

Market exchange is typically an exchange of goods for money as opposed to goods for goods because use of money solves the problem of

Problems with the use of commodity money include all of the following EXCEPT

The cheque-clearing system is

In equilibrium in the Lagos-Wright model

In the Lagos-Wright model, a Pareto optimal allocation has the property that

What are the costs of inflation?

The Lagos-Wright model exhibits

The costs of anticipated inflation, as typically measured

In the Lagos-Wright model, limited commitment means that

In the Lagos-Wright model, there is no welfare loss from inflation if

A deflationary black hole

When the central bank adopts a Friedman rule

In the contemporary Canadian economy, the best example of fiat money would be

The double coincidence of wants problem is solved by

In the Lagos-Wright model, if money growth decreases, then

A system that uses commodity-backed paper currency is most like a system that

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 17: Money in the Open Economy

In the Lagos-Wright model

The relationship between money growth and inflation was documented by

A system that uses commodity-based paper currency was used in Canada

In the Lagos-Wright model, an increase in the money growth rate

Market exchange is typically an exchange of goods for money as opposed to goods for goods because use of money solves the problem of

Problems with the use of commodity money include all of the following EXCEPT

The cheque-clearing system is

In equilibrium in the Lagos-Wright model

In the Lagos-Wright model, a Pareto optimal allocation has the property that

What are the costs of inflation?

The Lagos-Wright model exhibits

The costs of anticipated inflation, as typically measured

In the Lagos-Wright model, limited commitment means that

In the Lagos-Wright model, there is no welfare loss from inflation if

A deflationary black hole

When the central bank adopts a Friedman rule

In the contemporary Canadian economy, the best example of fiat money would be

The double coincidence of wants problem is solved by

In the Lagos-Wright model, if money growth decreases, then

A system that uses commodity-backed paper currency is most like a system that

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money, Inflation, and Banking: a Deeper Look

Filters