Exam 12: Money, Interest, and Inflation

The demand for money is

During an economic expansion when real GDP increases, the

If the Fed makes the quantity of money grow at the same rate as the growth rate of real GDP and velocity does not change, in the long run what happens to the price level and the inflation rate?

Suppose that P × Y is $5,000 million a year and the quantity of money is $500 million.Then the velocity of circulation is

The real interest rate equals the

Why is the nominal interest rate the opportunity cost of holding money?

Which statement most accurately describes the effect financial technology has had on the demand for money in the United States?

The dominant factor why the nominal interest rate differs among nations is that ________ differs among nations.

As a result of increased use of credit cards,

Suppose in the money market the equilibrium nominal interest rate is 5 percent.If the Fed increases the quantity of money, what is the effect on the nominal interest rate?

In the United States since 1970, how has the use of credit cards affected the demand for M1 as a percentage of GDP?

If the quantity of money starts to grow more rapidly than real GDP and velocity does not change, the result is

If real GDP grows at 4 percent, the quantity of money grows at 6 percent, and velocity does not change, then in the long run the inflation rate is

Inflation ________ the cost of holding money and ________ the after-tax real interest rate.

When the Fed changes the quantity of money, there is an immediate effect on

In the long run, an increase in the quantity of money ________ the value of money and ________ the price level.

Suppose that the equilibrium nominal interest rate is 5 percent and the equilibrium quantity of money is $1 trillion. At any interest rate below 5 percent,

Suppose that real GDP grows by 3 percent a year, the quantity of money grows 5 percent a year, and velocity does not change.In the long run, the inflation rate equals

If the Fed is worried about inflation and wants to raise the interest rate, in the short run it can

The quantity of money demanded is the