Exam 30: Inflation: Its Causes and Costs

Menu costs are costs of inflation limited to restaurants and fast-food establishments and are localised to countries.

By reducing the cash rate in the US to almost zero per cent, what would critics of the Federal Reserve Bank (the Fed - The US central bank) believe about the Fed's ability to stimulate the economy?

If between when you purchase an asset and sell it, the general price level and the price of the asset both double, then you have realised a:

Money neutrality is the proposition that:

Is there a relationship between money growth and hyperinflation?

Unexpected inflation redistributes wealth from _____.

Two countries, Alpha and Beta, are otherwise identical except that each dollar in Alpha is used more frequently than each dollar in Beta.For this to be true, it must be the case that, holding other factors equal, __________ in Alpha than in Beta.

Real GDP measures:

Which of the following statements is not correct when more money is created?

In the long run, the _____ adjusts to equilibrate the quantity of money supplied with the quantity demanded.

An increase in the money supply:

The most important variable affecting the demand for money in the long run is the:

The growth of EFTPOS and internet banking has reduced shoeleather costs as people do not need to go into the bank anymore.

Graph 11-1 -When the money supply curve in Graph11-1 shifts from MS₂ to MS₁:

The relative price of oil is a(n):

Why has Germany had much lower inflation than the US has over the past 50 years?

According to the quantity equation, if velocity is constant at two and real GDP is constant at 10 000, then, if the money supply is increased from 6250 to 6500, the price level:

The inflation tax is exactly like other taxes levied when the government prints money.

The inflation tax:

The quantity equation shows that if velocity and output are constant, a given percentage in the money supply will lead to the proportionally different percentage increase in the price level.