Exam 11: The Monetary System

A worker has negotiated a nominal wage contract with his employer for a period of 3 years.Which of the following will happen if the rate of inflation rises beyond the worker's expectations during this period?

What is likely to happen if the growth rate of money supply doubles in the following year while the growth rate of real output remains unchanged?

The "gold standard" is a system in which ________.

Which of the following changes will cause a downward movement along the demand curve for reserves?

A firm takes a 2-year loan at a nominal interest rate of 8 percent.It believes that the inflation rate will be 4 percent this year and 2 percent next year.What annual average real interest rate does the firm expect to pay?

Zimbabwe decided to fund deficit spending in the early 2000s by printing more and more currency.This method of obtaining revenue is called ________,and it resulted in ________ for Zimbabwe.

If the nominal interest rate in an economy is 8 percent and the real interest rate is 4 percent,the inflation in the economy is ________.

When an asset enables people to transfer purchasing power into the future,it serves the function of a ________.

In theory,any object ________ could play the role of fiat money.

If there are no changes in inflation expectations,a sale of government bonds by the Fed in the open market will cause ________.

The U.S.central bank is the government institution that ________.

Suppose that we produce a graph with the annual inflation rate on the y-axis and the growth rate of the money supply minus the growth rate of real GDP on the x-axis.We plot the averages of each of these quantities over the past 50 years on the graph.If the countries' points all lie approximately on the 45° line,then this lends support to the ________.

The demand curve for reserves is ________.

Everything else remaining unchanged,if the demand curve for reserves shifts to the right and the value of borrowed reserves is zero,________.

If the growth rate of real GDP and the rate of inflation in an economy are 2 percent and 1 percent,respectively,the growth rate of nominal GDP in the economy must be ________.

The Fed pursues its key objectives by ________.

A commercial bank's last resort for borrowing reserves is ________.

If a bank has $6 billion in reserves and loans $2 billion to another bank,then the total quantity of reserves demanded is ________.

Suppose you have borrowed money from a bank to buy a house.Which of the following will happen if the inflation rate unexpectedly rises?

Assuming all else equal,if a bank expects a bank run in the future,________.