Question 1

If velocity is a constant,then the equation of exchange is an economic model.

Accepted Answer

A) True 
 B)False

Question 2

Advocates of active stabilization policies,in defense of their views,argue that

Accepted Answer

A)  stabilization is less necessary than is commonly advocated by monetarists. 
B)  discretionary policy in not necessary because automatic stabilizers are sufficient. 
C)  perfect stabilization is not possible, but moderate improvements in economic performance are possible, such as the response to the events of September 11, 2001. 
D)  All of the above are correct. 
A)  stabilization is less necessary than is commonly advocated by monetarists. 
B)  discretionary policy in not necessary because automatic stabilizers are sufficient. 
C)  perfect stabilization is not possible, but moderate improvements in economic performance are possible, such as the response to the events of September 11, 2001. 
D)  All of the above are correct.

Question 3

The quantity theory of money builds on the equation of exchange.What specific assumptions are made that turn the equation of exchange from an accounting identity into an economic theory?

Accepted Answer

The principal assumption is that velocit

Question 4

The relationship between money growth rates and inflation between 1982 and 2010 helps explain why,by the 1990s,most economists had

Accepted Answer

A)  adopted the monetarist explanation of inflation. 
B)  adopted a rules-only approach to monetary policy. 
C)  become more convinced of the monetary causes of inflation. 
D)  abandoned monetarism as the primary explanation of inflation. 
A)  adopted the monetarist explanation of inflation. 
B)  adopted a rules-only approach to monetary policy. 
C)  become more convinced of the monetary causes of inflation. 
D)  abandoned monetarism as the primary explanation of inflation.

Question 5

What are the important factors which determine the velocity of money?

Accepted Answer

The main determinants of velocity are:
(

Question 6

What role does ideology play in the debate on stabilization?

Accepted Answer

A)  A large role, because there are conservative and liberal economists. 
B)  A primary role, because there are no economic aspects to the debate at all. 
C)  A minor role, because economists are fairly uniform in their political views. 
D)  No role at all, because this is purely a technical question. 
A)  A large role, because there are conservative and liberal economists. 
B)  A primary role, because there are no economic aspects to the debate at all. 
C)  A minor role, because economists are fairly uniform in their political views. 
D)  No role at all, because this is purely a technical question.

Question 7

One of the strongest arguments against active stabilization policy is

Accepted Answer

A)  that recognition lags make timely intervention very difficult. 
B)  the economy corrects itself very slowly. 
C)  the inability of economic theory to suggest appropriate policy. 
D)  the difficulty of obtaining agreement on monetary policy. 
A)  that recognition lags make timely intervention very difficult. 
B)  the economy corrects itself very slowly. 
C)  the inability of economic theory to suggest appropriate policy. 
D)  the difficulty of obtaining agreement on monetary policy.

Question 8

Define the following terms and explain their importance to the study of macroeconomics.
a.the relationship between interest rates and velocity
b.lags in stabilization policy
c.rules versus discretion

Accepted Answer

a.A change in interest rates changes the

Question 9

If financial news broadcasts reported that inflation was likely to rise significantly next year,what would most likely happen to the velocity of circulation?

Accepted Answer

A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to inflation. 
A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to inflation.

Question 10

The increased use of PayPal will decrease the velocity of money.

Accepted Answer

A) True 
 B)False

Question 11

What do most economists think is the most accurate statement about velocity?

Accepted Answer

A)  It is fairly constant in the short run, but varies considerably in the long run, complicating predictions about nominal GDP. 
B)  M1 velocity is more stable in the short run than M2 velocity, and it has been a superior tool in predicting changes in nominal GDP. 
C)  It is not constant in the short run, and predictions about nominal GDP have not fared well. 
D)  M2 velocity has been less stable than M1 velocity, but both are reliable enough to make accurate predictions about changes in nominal GDP. 
A)  It is fairly constant in the short run, but varies considerably in the long run, complicating predictions about nominal GDP. 
B)  M1 velocity is more stable in the short run than M2 velocity, and it has been a superior tool in predicting changes in nominal GDP. 
C)  It is not constant in the short run, and predictions about nominal GDP have not fared well. 
D)  M2 velocity has been less stable than M1 velocity, but both are reliable enough to make accurate predictions about changes in nominal GDP.

Question 12

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

Accepted Answer

A) 900.0. 
B) 90.0. 
C) 81.0. 
D) 9.0. 
E) 8.1. 
A) 900.0. 
B) 90.0. 
C) 81.0. 
D) 9.0. 
E) 8.1.

Question 13

On a steeply sloped aggregate supply curve,monetary policy will affect primarily output.

Accepted Answer

A) True 
 B)False

Question 14

The velocity of circulation is the number of times per year a dollar is spent.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following policies would a Keynesian expect to produce the largest increase in income?

Accepted Answer

A)  a reduction in government spending of $100 billion 
B)  an increase in transfer payments of $100 billion 
C)  an increase in government spending of $100 billion 
D)  a tax cut of $100 billion 
A)  a reduction in government spending of $100 billion 
B)  an increase in transfer payments of $100 billion 
C)  an increase in government spending of $100 billion 
D)  a tax cut of $100 billion

Question 16

Policy lags are typically much shorter for monetary policy than for fiscal policy.

Accepted Answer

A) True 
 B)False

Question 17

In the monetarist view,the money supply affects the economy

Accepted Answer

A)  through investment spending and government spending. 
B)  indirectly through interest rates. 
C)  directly, apart from interest rates. 
D)  by altering the size of the money multiplier. 
A)  through investment spending and government spending. 
B)  indirectly through interest rates. 
C)  directly, apart from interest rates. 
D)  by altering the size of the money multiplier.

Question 18

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

Accepted Answer

A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to saving accounts. 
A)  It will decrease. 
B)  It will increase. 
C)  It will remain constant. 
D)  Velocity is unrelated to saving accounts.

Question 19

When will stabilization policy be most effective in combating recessions?

Accepted Answer

A)  when AS is flat 
B)  when AS is very steep 
C)  when AS has a moderately upward slope 
D)  when AS has a moderately downward slope. 
A)  when AS is flat 
B)  when AS is very steep 
C)  when AS has a moderately upward slope 
D)  when AS has a moderately downward slope.

Question 20

Which of the following is an example of unconventional monetary policy?

Accepted Answer

A)  the Federal Reserve selling T-bills 
B)  the Federal Reserve decreasing the discount rate 
C)  the Federal Reserve purchasing mortgage-backed securities 
D)  none of the above 
A)  the Federal Reserve selling T-bills 
B)  the Federal Reserve decreasing the discount rate 
C)  the Federal Reserve purchasing mortgage-backed securities 
D)  none of the above

If velocity is a constant,then the equation of exchange is an economic model.

Advocates of active stabilization policies,in defense of their views,argue that

The quantity theory of money builds on the equation of exchange.What specific assumptions are made that turn the equation of exchange from an accounting identity into an economic theory?

The relationship between money growth rates and inflation between 1982 and 2010 helps explain why,by the 1990s,most economists had

What are the important factors which determine the velocity of money?

What role does ideology play in the debate on stabilization?

One of the strongest arguments against active stabilization policy is

Define the following terms and explain their importance to the study of macroeconomics. a.the relationship between interest rates and velocity b.lags in stabilization policy c.rules versus discretion

If financial news broadcasts reported that inflation was likely to rise significantly next year,what would most likely happen to the velocity of circulation?

The increased use of PayPal will decrease the velocity of money.

What do most economists think is the most accurate statement about velocity?

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

On a steeply sloped aggregate supply curve,monetary policy will affect primarily output.

The velocity of circulation is the number of times per year a dollar is spent.

Which of the following policies would a Keynesian expect to produce the largest increase in income?

Policy lags are typically much shorter for monetary policy than for fiscal policy.

In the monetarist view,the money supply affects the economy

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

When will stabilization policy be most effective in combating recessions?

Which of the following is an example of unconventional monetary policy?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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Exam 15: The Debate over Monetary and Fiscal Policy

If velocity is a constant,then the equation of exchange is an economic model.

Advocates of active stabilization policies,in defense of their views,argue that

The quantity theory of money builds on the equation of exchange.What specific assumptions are made that turn the equation of exchange from an accounting identity into an economic theory?

The relationship between money growth rates and inflation between 1982 and 2010 helps explain why,by the 1990s,most economists had

What are the important factors which determine the velocity of money?

What role does ideology play in the debate on stabilization?

One of the strongest arguments against active stabilization policy is

Define the following terms and explain their importance to the study of macroeconomics. a.the relationship between interest rates and velocity b.lags in stabilization policy c.rules versus discretion

If financial news broadcasts reported that inflation was likely to rise significantly next year,what would most likely happen to the velocity of circulation?

The increased use of PayPal will decrease the velocity of money.

What do most economists think is the most accurate statement about velocity?

If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins,the velocity of circulation is

On a steeply sloped aggregate supply curve,monetary policy will affect primarily output.

The velocity of circulation is the number of times per year a dollar is spent.

Which of the following policies would a Keynesian expect to produce the largest increase in income?

Policy lags are typically much shorter for monetary policy than for fiscal policy.

In the monetarist view,the money supply affects the economy

In 2005-2006,the Fed increased interest rates in an attempt to halt inflation.What was the most likely effect of raising interest rates on velocity?

When will stabilization policy be most effective in combating recessions?

Which of the following is an example of unconventional monetary policy?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters