Question 1

In a Keynesian model,a decrease in the money supply

Accepted Answer

A)  causes interest rates to fall. 
B)  shifts the investment function upward. 
C)  shifts the C + I + G + (X - M₁) line downward. 
D)  leads to an increase in the GDP. 
E)  has no effect on the level of economic activity. 
A)  causes interest rates to fall. 
B)  shifts the investment function upward. 
C)  shifts the C + I + G + (X - M₁) line downward. 
D)  leads to an increase in the GDP. 
E)  has no effect on the level of economic activity.

Question 2

The quantity of money demanded varies inversely with

Accepted Answer

A)  the level of real GDP. 
B)  the interest rate. 
C)  bond prices. 
D)  the level of intended spending. 
E)  the price level. 
A)  the level of real GDP. 
B)  the interest rate. 
C)  bond prices. 
D)  the level of intended spending. 
E)  the price level.

Question 3

To monetarists,the monetary base is important because

Accepted Answer

A)  it is unaffected by policy actions of the Fed. 
B)  unlike the money supply, interest rates are not affected by changes in the monetary base. 
C)  it is based on the gold certificate holdings of the Fed. 
D)  the total money supply is dependent on as well as made from it. 
E)  it constitutes the broadest possible definition of the money supply. 
A)  it is unaffected by policy actions of the Fed. 
B)  unlike the money supply, interest rates are not affected by changes in the monetary base. 
C)  it is based on the gold certificate holdings of the Fed. 
D)  the total money supply is dependent on as well as made from it. 
E)  it constitutes the broadest possible definition of the money supply.

Question 4

The transactions demand for money

Accepted Answer

A)  reflects the need for money in the event of unpredictable occurrences. 
B)  is of major importance in a barter economy. 
C)  decreases as household income increases. 
D)  reflects expectations of lower stock and bond prices. 
E)  increases as real GDP rises. 
A)  reflects the need for money in the event of unpredictable occurrences. 
B)  is of major importance in a barter economy. 
C)  decreases as household income increases. 
D)  reflects expectations of lower stock and bond prices. 
E)  increases as real GDP rises.

Question 5

A rise in bond prices must mean that

Accepted Answer

A)  interest rates have fallen. 
B)  interest rates have risen. 
C)  bond purchases and sales will cease. 
D)  money is tight and credit is no longer available. 
E)  the amount of money demanded for investment will fall. 
A)  interest rates have fallen. 
B)  interest rates have risen. 
C)  bond purchases and sales will cease. 
D)  money is tight and credit is no longer available. 
E)  the amount of money demanded for investment will fall.

Question 6

In a Keynesian model,an increase in the money supply results in

Accepted Answer

A)  a decrease in the interest rate and increases in investment and GDP. 
B)  decreases in the interest rate, investment, and GDP. 
C)  increases in the interest rate, investment, and GDP. 
D)  an increase in the interest rate with decreases in both investment and GDP. 
E)  a decrease in the interest rate, with the effect on investment and GDP uncertain. 
A)  a decrease in the interest rate and increases in investment and GDP. 
B)  decreases in the interest rate, investment, and GDP. 
C)  increases in the interest rate, investment, and GDP. 
D)  an increase in the interest rate with decreases in both investment and GDP. 
E)  a decrease in the interest rate, with the effect on investment and GDP uncertain.

Question 7

The economic situation experienced by the country in the mid-1970s was different from that in preceding times mainly because

Accepted Answer

A)  inflation was higher than it had ever been. 
B)  total unemployment reached record levels. 
C)  it faced high unemployment coupled with high inflation. 
D)  the federal budget steadily decreased as a percentage of GDP. 
E)  this was the first time the Fed held to a tight monetary policy. 
A)  inflation was higher than it had ever been. 
B)  total unemployment reached record levels. 
C)  it faced high unemployment coupled with high inflation. 
D)  the federal budget steadily decreased as a percentage of GDP. 
E)  this was the first time the Fed held to a tight monetary policy.

Question 8

If the rate of inflation is 8 percent and a lender receives $11,000 at the end of the year for a loan of $10,000,the real rate of interest is approximately ________ percent.

Accepted Answer

A)  13 
B)  11 
C)  6 
D)  3 
E)  2 
A)  13 
B)  11 
C)  6 
D)  3 
E)  2

Question 9

The income velocity of circulation refers to the

Accepted Answer

A)  turnover of money. 
B)  current interest rate. 
C)  rate of inflation. 
D)  speed with which economic recovery is realized. 
E)  nominal GDP divided by real GDP. 
A)  turnover of money. 
B)  current interest rate. 
C)  rate of inflation. 
D)  speed with which economic recovery is realized. 
E)  nominal GDP divided by real GDP.

Question 10

Economists who favor the use of the rate of growth of the money supply as an indicator of monetary tightness or ease argue that if the Fed increases the money supply to keep interest rates stable,it is in danger of

Accepted Answer

A)  promoting a recession. 
B)  reducing the demand for money. 
C)  reducing the monetary base. 
D)  increasing the price level. 
E)  pursuing a tight money policy. 
A)  promoting a recession. 
B)  reducing the demand for money. 
C)  reducing the monetary base. 
D)  increasing the price level. 
E)  pursuing a tight money policy.

Question 11

On December 5,1996,Fed chair Alan Greenspan voiced concern over escalating asset values brought about by what he termed

Accepted Answer

A)  conspicuous consumption. 
B)  fine tuning. 
C)  the invisible hand. 
D)  rational expectations. 
E)  irrational exuberance. 
A)  conspicuous consumption. 
B)  fine tuning. 
C)  the invisible hand. 
D)  rational expectations. 
E)  irrational exuberance.

Question 12

In a Keynesian model,an increase in the money supply will increase GDP by

Accepted Answer

A)  increasing the rate of interest, thereby increasing savings. 
B)  lowering the rate of interest and shifting the investment function upward. 
C)  causing prices to rise and thereby trading off inflation against unemployment. 
D)  causing an increase in government expenditures. 
E)  shifting the transactions demand for money. 
A)  increasing the rate of interest, thereby increasing savings. 
B)  lowering the rate of interest and shifting the investment function upward. 
C)  causing prices to rise and thereby trading off inflation against unemployment. 
D)  causing an increase in government expenditures. 
E)  shifting the transactions demand for money.

In a Keynesian model,a decrease in the money supply

The quantity of money demanded varies inversely with

To monetarists,the monetary base is important because

The transactions demand for money

A rise in bond prices must mean that

In a Keynesian model,an increase in the money supply results in

The economic situation experienced by the country in the mid-1970s was different from that in preceding times mainly because

If the rate of inflation is 8 percent and a lender receives $11,000 at the end of the year for a loan of $10,000,the real rate of interest is approximately ________ percent.

The income velocity of circulation refers to the

Economists who favor the use of the rate of growth of the money supply as an indicator of monetary tightness or ease argue that if the Fed increases the money supply to keep interest rates stable,it is in danger of

On December 5,1996,Fed chair Alan Greenspan voiced concern over escalating asset values brought about by what he termed

In a Keynesian model,an increase in the money supply will increase GDP by

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 25: Monetary Policy,interest Rates,and Economic Activity

In a Keynesian model,a decrease in the money supply

The quantity of money demanded varies inversely with

To monetarists,the monetary base is important because

The transactions demand for money

A rise in bond prices must mean that

In a Keynesian model,an increase in the money supply results in

The economic situation experienced by the country in the mid-1970s was different from that in preceding times mainly because

If the rate of inflation is 8 percent and a lender receives $11,000 at the end of the year for a loan of $10,000,the real rate of interest is approximately ________ percent.

The income velocity of circulation refers to the

Economists who favor the use of the rate of growth of the money supply as an indicator of monetary tightness or ease argue that if the Fed increases the money supply to keep interest rates stable,it is in danger of

On December 5,1996,Fed chair Alan Greenspan voiced concern over escalating asset values brought about by what he termed

In a Keynesian model,an increase in the money supply will increase GDP by

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

Filters