Question 1

The equation of exchange describes how money supply times velocity equals real GDP.

Accepted Answer

A) True 
 B)False

Question 2

Given that petrol is key to the transport sector and all other sectors in Australia, why does the constant changing of price petrol not create menu costs?

Accepted Answer

There are very few costs assoc

Question 3

According to the quantity equation, if velocity and real GDP are constant and the Reserve Bank increases the money supply by five per cent then the price level:

Accepted Answer

A) decreases by 10 per cent 
B) decreases by five percent 
C) is also constant 
D) increases by five per cent 
A) decreases by 10 per cent 
B) decreases by five percent 
C) is also constant 
D) increases by five per cent

Question 4

The demand for money depends on:

Accepted Answer

A) the interest rate 
B) the average level of prices in the economy 
C) income 
D) all of the above 
A) the interest rate 
B) the average level of prices in the economy 
C) income 
D) all of the above

Question 5

Which of the following statements is correct?

Accepted Answer

A) economic variables measured in physical units are nominal variables, and economic variables measured in monetary units are real variables 
B) economic variables measured in physical units are real variables, and economic variables measured in monetary units are nominal variables 
C) economic variables measured in physical units are actual variables, and economic variables measured in monetary units are nominal variables 
D) economic variables measured in physical units are real variables, and economic variables measured in monetary units are actual variables 
A) economic variables measured in physical units are nominal variables, and economic variables measured in monetary units are real variables 
B) economic variables measured in physical units are real variables, and economic variables measured in monetary units are nominal variables 
C) economic variables measured in physical units are actual variables, and economic variables measured in monetary units are nominal variables 
D) economic variables measured in physical units are real variables, and economic variables measured in monetary units are actual variables

Question 6

Unexpected inflation has no wealth redistribution effect on the population.

Accepted Answer

A) True 
 B)False

Question 7

Inflation is the increase in the overall level of prices.

Accepted Answer

A) True 
 B)False

Question 8

The irrelevance of monetary changes for nominal variables is called monetary neutrality.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) the equilibrium value of money increases 
B) the equilibrium price level increases 
C) the supply of money has increased 
D) the demand for goods and services will increase 
A) the equilibrium value of money increases 
B) the equilibrium price level increases 
C) the supply of money has increased 
D) the demand for goods and services will increase

Question 10

According to the quantity equation, if velocity and real GDP are constant and the Reserve Bank increases the money supply by five per cent, then the price level

Accepted Answer

A) decreases by 10 per cent 
B) decreases by five per cent 
C) is also constant 
D) increases by five percent 
A) decreases by 10 per cent 
B) decreases by five per cent 
C) is also constant 
D) increases by five percent

Question 11

According to the quantity equation, if velocity is constant at 2.5 and real GDP is constant at 8000, then, if the money supply is increased from 4800 to 5280, the price level:

Accepted Answer

A) increases to 1.1 
B) increases to 1.5 
C) increases to 1.65 
D) is constant at 1.5 
A) increases to 1.1 
B) increases to 1.5 
C) increases to 1.65 
D) is constant at 1.5

Question 12

A period of generally falling prices is called:

Accepted Answer

A) disinflation 
B) depression 
C) deflation 
D) recession 
A) disinflation 
B) depression 
C) deflation 
D) recession

Question 13

In the long run, countries with higher rates of money growth usually have:

Accepted Answer

A) higher rates of inflation 
B) lower rates of inflation 
C) faster growth rates of real output 
D) smaller budget deficits 
A) higher rates of inflation 
B) lower rates of inflation 
C) faster growth rates of real output 
D) smaller budget deficits

Question 14

Which of the following variables is not a real variable?

Accepted Answer

A) The amount of corn 
B) The nominal interest rate adjusted for inflation 
C) The dollar wage 
D) The price of bananas relative to the price of oranges 
A) The amount of corn 
B) The nominal interest rate adjusted for inflation 
C) The dollar wage 
D) The price of bananas relative to the price of oranges

Exam 30: Inflation: Its Causes and Costs

The equation of exchange describes how money supply times velocity equals real GDP.

Given that petrol is key to the transport sector and all other sectors in Australia, why does the constant changing of price petrol not create menu costs?

According to the quantity equation, if velocity and real GDP are constant and the Reserve Bank increases the money supply by five per cent then the price level:

The demand for money depends on:

Which of the following statements is correct?

Unexpected inflation has no wealth redistribution effect on the population.

Inflation is the increase in the overall level of prices.

The irrelevance of monetary changes for nominal variables is called monetary neutrality.

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

According to the quantity equation, if velocity and real GDP are constant and the Reserve Bank increases the money supply by five per cent, then the price level

According to the quantity equation, if velocity is constant at 2.5 and real GDP is constant at 8000, then, if the money supply is increased from 4800 to 5280, the price level:

A period of generally falling prices is called:

In the long run, countries with higher rates of money growth usually have:

Which of the following variables is not a real variable?

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

Filters

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