Exam 11: The Monetary System

Betsy enters a roadside cafeteria and orders a medium-sized cappuccino and a chicken burger.She hands over $5 at the cash counter and collects the food.In this example,money serves the function of ________.

Before he went to college,Jon bought a car from his brother Tony.They agreed that Jon would pay Tony $10,000 when Jon graduated from college.While Jon was at college,inflation was higher than expected.Thinking only about the car transaction,this unexpectedly high inflation was ________.

If the growth rate of nominal GDP and the rate of inflation in an economy are 4 percent and 1 percent,respectively,the growth rate of real GDP in the economy must be ________.

Firm investment depends most strongly on which of the following?

Suppose that the money supply increases by 20 percent.What does the quantity theory of money tell us must happen to real GDP?

The Federal Reserve determines and implements the ________ policy of the United States.

In Swaziland,the nominal GDP growth rate is 5 percent and the inflation rate is 7 percent.The real GDP growth rate in Swaziland is approximately ________.

The quantity theory of money assumes a constant ratio of ________.

Assume that the inflation rate in an economy is measured on the y-axis on a graph,and the annualized growth rate of money supply minus the annualized growth rate of real GDP is measured on the x-axis.If a curve is plotted to establish the relationship between both variables,the curve is likely to be ________.

Scenario: An economy produces only cell phones. In 2015, the economy manufactured 275 cell phones, and each cell phone sold for $200. In 2016, the economy manufactured 280 cell phones, but the price of each cell phone fell to $180. -Refer to the scenario above.Using 2016 as the base year,what was the real GDP of the economy in 2015?

What does the quantity theory of money imply? If the growth rate of money supply and growth rate of real GDP in an economy are 8 percent and 6 percent,respectively,then what is the inflation rate in the economy?

George believes that the inflation rate will be around 9 percent this year because it was around 9 percent in the previous year.George can be said to have ________.

The ________ is the interest rate that banks charge each other for overnight loans.

When Terry retired from Caterpillar,he received a pension: Caterpillar would pay him $50,000 the first year he was retired,with the amount increasing by 5 percent each year thereafter.If inflation turned out to be 8 percent each year,what would happen to the real value of Terry's pension?

Scenario: Bookland is a country that produces only books. In 1990, Bookland produced 10,000 books at a market price of $10 each. In 1991, Bookland produced 11,000 books at a market price of $12 each. -Refer to the scenario above.The nominal GDP in Bookland in 1990 was ________.

Ryan saved $50,000 last year so that he could buy a car this year.In this case,money served the function of a ________.

Which of the following will not cause a shift in the demand curve for reserves?

Rising inflation is a pressing concern of the government of Utopia.Suggest a suitable monetary policy that the central bank can adopt to lower the rate of inflation.

Is there any risk involved in using fiat money? How can it be minimized?

The model of expectations in which the current level of inflation depends on past levels is referred to as the ________.