Question 1

Time to maturity refers to the amount of time until

Accepted Answer

A) an asset repays the principal to an investor. 
B) an asset pays interest for the first time. 
C) a bond can be sold on the secondary market. 
D) the yield curve shows an upward slope. 
A) an asset repays the principal to an investor. 
B) an asset pays interest for the first time. 
C) a bond can be sold on the secondary market. 
D) the yield curve shows an upward slope.

Question 2

Suppose real money demand is 1000,real output is 6000,and the price level is 200.What is the level of velocity in this economy?

Accepted Answer

A) 2 
B) 3 
C) 6 
D) 12 
A) 2 
B) 3 
C) 6 
D) 12

Question 3

If the nominal money supply grows 6%,real income rises 2%,and the inflation rate is 5%,then the income elasticity of money demand is

Accepted Answer

A) 0)5. 
B) 0)75. 
C) 1)0. 
D) 1)5. 
A) 0)5. 
B) 0)75. 
C) 1)0. 
D) 1)5.

Question 4

A good that is used as a medium of exchange as well as being a consumption good is called

Accepted Answer

A) a barter money. 
B) a commodity money. 
C) a legal tender. 
D) a debased money. 
A) a barter money. 
B) a commodity money. 
C) a legal tender. 
D) a debased money.

Question 5

If real income rises 4%,prices rise 1%,and nominal money demand rises 4%,what is the income elasticity of real money demand?

Accepted Answer

A) 3/4 
B) 4/5 
C) 5/6 
D) 1 
A) 3/4 
B) 4/5 
C) 5/6 
D) 1

Question 6

What are the major components of M1? What are the major components of M2? Describe each component.

Accepted Answer

The principal components of M1 are curre

Question 7

moneys primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization.This function of money is called

Accepted Answer

A) store of value. 
B) medium of exchange. 
C) standard of deferred payment. 
D) unit of account. 
A) store of value. 
B) medium of exchange. 
C) standard of deferred payment. 
D) unit of account.

Question 8

If the interest elasticity of money demand is -0.1,by what percent does money demand change if the nominal interest rate rises from 2% to 3%?

Accepted Answer

A) -0.1% 
B) 5% 
C) 0% 
D) -5% 
A) -0.1% 
B) 5% 
C) 0% 
D) -5%

Question 9

The idea that investors today compare the returns on bonds with differing times to maturity to see which is expected to give them the highest return is the underlying principle behind the ________ of the term structure of interest rates.

Accepted Answer

A) expectations theory 
B) investors' viewpoint analysis 
C) segmented-markets theory 
D) yield comparison theory 
A) expectations theory 
B) investors' viewpoint analysis 
C) segmented-markets theory 
D) yield comparison theory

Question 10

Suppose velocity is 3,real output is 9000,and the price level is 1.5.What is the level of real money demand in this economy?

Accepted Answer

A) 2000 
B) 3000 
C) 6000 
D) 30,000 
A) 2000 
B) 3000 
C) 6000 
D) 30,000

Question 11

If nominal money supply grows 3% and real money demand grows 8%,the inflation rate is

Accepted Answer

A) -5%. 
B) 8/3%. 
C) 5%. 
D) 11%. 
A) -5%. 
B) 8/3%. 
C) 5%. 
D) 11%.

Question 12

Why did some of the formerly Communist countries of Eastern Europe have inflation rates over 100%,while others didn't? Which factor was more important in explaining the differing inflation rates,real money demand or nominal money supply? Why did the countries with high inflation rates allow inflation to get so high?

Accepted Answer

Some countries had high inflation while

Question 13

Which of the following is not part of M1?

Accepted Answer

A) Transaction accounts 
B) Checking accounts 
C) Time deposits 
D) Traveler's checks 
A) Transaction accounts 
B) Checking accounts 
C) Time deposits 
D) Traveler's checks

Question 14

Suppose that you could buy a one-year bond today,which has an interest rate of 3%.If you wait a year and buy a one-year bond then,the interest rate will be 4%.Two years from now,a one-year bond is expected to offer an interest rate of 5%.According to the expectations theory of the term structure of interest rates,what is the interest rate on a two-year bond today? What is the interest rate on a three-year bond today?

Accepted Answer

Two-year bond: (3% +

Question 15

Which of the following statements about M1 and M2 is not true?

Accepted Answer

A) Transaction accounts are part of M1. 
B) M2 is more liquid than M1. 
C) M2 is larger than M1. 
D) Transaction accounts are part of M2. 
A) Transaction accounts are part of M1. 
B) M2 is more liquid than M1. 
C) M2 is larger than M1. 
D) Transaction accounts are part of M2.

Question 16

If real money demand increases 5% and real money supply increases 10%,by about how much does the price level change?

Accepted Answer

A) Falls by 5% 
B) Unchanged 
C) Rises by 2% 
D) Rises by 5% 
A) Falls by 5% 
B) Unchanged 
C) Rises by 2% 
D) Rises by 5%

Question 17

Bonds sold by the U.S.government that offer a certain real interest rate are known as

Accepted Answer

A) zero-coupon bonds. 
B) Treasury Inflation-Protected Securities. 
C) denominalized securities. 
D) savings bonds. 
A) zero-coupon bonds. 
B) Treasury Inflation-Protected Securities. 
C) denominalized securities. 
D) savings bonds.

Question 18

What function is money playing in each of these situations:
a.You walk into a store in Germany and see that all the prices are in euros.
b.You buy a candy bar for $1.25.
c.Your Aunt Jane keeps $100 bills tucked into many books in her house.

Accepted Answer

a.unit of account; b

Question 19

Define asset market equilibrium and state the asset market equilibrium condition.

Accepted Answer

Asset market equilibrium exists when the

Question 20

Calculate the change in the price level for each of the following events,taken one at a time,with other variables unchanged.
(a)Money supply increases 10%.
(b)Money demand increases 5%.
(c)Money supply decreases 5% while money demand increases 5%.
(d)Money supply increases 15% while money demand increases 5%.

Accepted Answer

(a)10%
(b)

Time to maturity refers to the amount of time until

Suppose real money demand is 1000,real output is 6000,and the price level is 200.What is the level of velocity in this economy?

If the nominal money supply grows 6%,real income rises 2%,and the inflation rate is 5%,then the income elasticity of money demand is

A good that is used as a medium of exchange as well as being a consumption good is called

If real income rises 4%,prices rise 1%,and nominal money demand rises 4%,what is the income elasticity of real money demand?

What are the major components of M1? What are the major components of M2? Describe each component.

moneys primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization.This function of money is called

If the interest elasticity of money demand is -0.1,by what percent does money demand change if the nominal interest rate rises from 2% to 3%?

The idea that investors today compare the returns on bonds with differing times to maturity to see which is expected to give them the highest return is the underlying principle behind the ________ of the term structure of interest rates.

Suppose velocity is 3,real output is 9000,and the price level is 1.5.What is the level of real money demand in this economy?

If nominal money supply grows 3% and real money demand grows 8%,the inflation rate is

Which of the following is not part of M1?

Which of the following statements about M1 and M2 is not true?

If real money demand increases 5% and real money supply increases 10%,by about how much does the price level change?

Bonds sold by the U.S.government that offer a certain real interest rate are known as

What function is money playing in each of these situations: a.You walk into a store in Germany and see that all the prices are in euros. b.You buy a candy bar for $1.25. c.Your Aunt Jane keeps $100 bills tucked into many books in her house.

Define asset market equilibrium and state the asset market equilibrium condition.

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

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Exam 7: The Asset Market, money, and Prices

Time to maturity refers to the amount of time until

Suppose real money demand is 1000,real output is 6000,and the price level is 200.What is the level of velocity in this economy?

If the nominal money supply grows 6%,real income rises 2%,and the inflation rate is 5%,then the income elasticity of money demand is

A good that is used as a medium of exchange as well as being a consumption good is called

If real income rises 4%,prices rise 1%,and nominal money demand rises 4%,what is the income elasticity of real money demand?

What are the major components of M1? What are the major components of M2? Describe each component.

moneys primary role in the economy comes from the benefits of lowering transactions costs and allowing specialization.This function of money is called

If the interest elasticity of money demand is -0.1,by what percent does money demand change if the nominal interest rate rises from 2% to 3%?

The idea that investors today compare the returns on bonds with differing times to maturity to see which is expected to give them the highest return is the underlying principle behind the ________ of the term structure of interest rates.

Suppose velocity is 3,real output is 9000,and the price level is 1.5.What is the level of real money demand in this economy?

If nominal money supply grows 3% and real money demand grows 8%,the inflation rate is

Which of the following is not part of M1?

Which of the following statements about M1 and M2 is not true?

If real money demand increases 5% and real money supply increases 10%,by about how much does the price level change?

Bonds sold by the U.S.government that offer a certain real interest rate are known as

What function is money playing in each of these situations: a.You walk into a store in Germany and see that all the prices are in euros. b.You buy a candy bar for $1.25. c.Your Aunt Jane keeps $100 bills tucked into many books in her house.

Define asset market equilibrium and state the asset market equilibrium condition.

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters