Question 1

If the Fed wants to raise interest rates, then it can use its open market operations to:

Accepted Answer

A)  increase the money supply. 
B)  decrease the money supply. 
C)  increase money demand. 
D)  decrease money demand. 
A)  increase the money supply. 
B)  decrease the money supply. 
C)  increase money demand. 
D)  decrease money demand.

Question 2

Exhibit 16-4 Aggregate demand and supply model
 
In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD curve from AD3 to AD2?

Accepted Answer

A)  Lower the legal reserve requirement. 
B)  Lower the discount rate. 
C)  Lower the federal funds rate. 
D)  Sell government securities. 
A)  Lower the legal reserve requirement. 
B)  Lower the discount rate. 
C)  Lower the federal funds rate. 
D)  Sell government securities.

Question 3

Exhibit 16-5 Money, investment and product markets
 
In Exhibit 16-5, a shift in aggregate demand from AD2 to AD3:

Accepted Answer

A)  increases real GDP, and lowers the price level. 
B)  decreases real GDP, and lowers the price level. 
C)  increases real GDP, and raises the price level. 
D)  decreases real GDP, and raises the price level. 
A)  increases real GDP, and lowers the price level. 
B)  decreases real GDP, and lowers the price level. 
C)  increases real GDP, and raises the price level. 
D)  decreases real GDP, and raises the price level.

Question 4

Keynes called money people hold to make routine day-to-day purchases the:

Accepted Answer

A)  transactions demand for holding money. 
B)  precautionary demand for holding money. 
C)  speculative demand for holding money. 
D)  store of value demand for holding money. 
A)  transactions demand for holding money. 
B)  precautionary demand for holding money. 
C)  speculative demand for holding money. 
D)  store of value demand for holding money.

Question 5

The velocity of money is:

Accepted Answer

A)  money supply divided by prices. 
B)  spending divided by output. 
C)  required monetary reserves divided by income. 
D)  GDP divided by the money supply. 
A)  money supply divided by prices. 
B)  spending divided by output. 
C)  required monetary reserves divided by income. 
D)  GDP divided by the money supply.

Question 6

According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:

Accepted Answer

A)  $0.13. 
B)  $1.25. 
C)  $8. 
D)  $200. 
A)  $0.13. 
B)  $1.25. 
C)  $8. 
D)  $200.

If the Fed wants to raise interest rates, then it can use its open market operations to:

Exhibit 16-4 Aggregate demand and supply model In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD curve from AD₃ to AD₂?

Exhibit 16-5 Money, investment and product markets In Exhibit 16-5, a shift in aggregate demand from AD₂ to AD₃:

Keynes called money people hold to make routine day-to-day purchases the:

The velocity of money is:

According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

Exam 26: Monetary Policy

If the Fed wants to raise interest rates, then it can use its open market operations to:

Exhibit 16-4 Aggregate demand and supply model In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD curve from AD3 to AD2?

Exhibit 16-5 Money, investment and product markets In Exhibit 16-5, a shift in aggregate demand from AD2 to AD3:

Keynes called money people hold to make routine day-to-day purchases the:

The velocity of money is:

According to the quantity theory of money, if an economy produces 5,000 units of output, its money supply equals $40,000 and the velocity of money equals one, then the price level will equal:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

Exhibit 16-4 Aggregate demand and supply model In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD curve from AD₃ to AD₂?

Exhibit 16-5 Money, investment and product markets In Exhibit 16-5, a shift in aggregate demand from AD₂ to AD₃: