Question 1

A change in the price level changes the amount of nominal money people demand.

Accepted Answer

A) True 
 B)False

Question 2

Changing which of the following is a Federal Reserve monetary policy tool?

Accepted Answer

A)  required reserve ratios 
B)  desired reserve ratios 
C)  excess reserve ratios. 
D)  gold and foreign reserve ratios 
A)  required reserve ratios 
B)  desired reserve ratios 
C)  excess reserve ratios. 
D)  gold and foreign reserve ratios

Question 3

-The figure above illustrates the effect of

Accepted Answer

A)  an increase in real GDP. 
B)  a decrease in real GDP. 
C)  an increase in the monetary base. 
D)  a decrease in the monetary base. 
A)  an increase in real GDP. 
B)  a decrease in real GDP. 
C)  an increase in the monetary base. 
D)  a decrease in the monetary base.

Question 4

Suppose that nominal interest rates double.As a result,the quantity of money doubles as well.

Accepted Answer

A) True 
 B)False

Question 5

The table below shows data for Japan. $$\begin{array} { | l | c | c | } 
\hline & \mathbf { 2 0 0 8 } & \mathbf { 2 0 0 9 } \
\hline \text { M1 growth rate } & 0.7 & 0.9 \
\hline \text { Inflation rate } & 0.4 & - 0.3 \
\hline
\end{array}$$
Assuming the rate of velocity change is constant,real GDP

Accepted Answer

A)  grew by 0.3 percent in 2008. 
B)  grew by -1.2 percent in 2009. 
C)  grew by 1.1 percent in 2008. 
D)  grew by 0.9 percent in 2009. 
A)  grew by 0.3 percent in 2008. 
B)  grew by -1.2 percent in 2009. 
C)  grew by 1.1 percent in 2008. 
D)  grew by 0.9 percent in 2009.

Question 6

On a given day the quantity of money is ________ and the supply of money curve is ________.

Accepted Answer

A)  fixed; horizontal 
B)  fixed; vertical 
C)  variable; horizontal 
D)  variable; vertical 
A)  fixed; horizontal 
B)  fixed; vertical 
C)  variable; horizontal 
D)  variable; vertical

Question 7

-In the long run,when the Fed increases the quantity of money the

Accepted Answer

A)  nothing real changes. 
B)  price level falls. 
C)  real interest rate rises. 
D)  nominal interest rate falls. 
A)  nothing real changes. 
B)  price level falls. 
C)  real interest rate rises. 
D)  nominal interest rate falls.

Question 8

-In the above figure,suppose the economy is initially on the demand for money curve MD₁.What is the effect of a fall in the nominal interest rate?

Accepted Answer

A)  The demand for money curve would shift rightward to MD₂. 
B)  The demand for money curve would shift leftward to MD₀. 
C)  There would be a movement upward along the demand for money curve MD₁. 
D)  There would be a movement downward along the demand for money curve MD₁. 
A)  The demand for money curve would shift rightward to MD₂. 
B)  The demand for money curve would shift leftward to MD₀. 
C)  There would be a movement upward along the demand for money curve MD₁. 
D)  There would be a movement downward along the demand for money curve MD₁.

Question 9

The opportunity cost of holding money balances rather than other assets is

Accepted Answer

A)  the nominal interest rate. 
B)  the price level. 
C)  forgone consumption. 
D)  forgone liquidity. 
A)  the nominal interest rate. 
B)  the price level. 
C)  forgone consumption. 
D)  forgone liquidity.

Question 10

Are credit cards or debit cards money?
Explain your answer.

Accepted Answer

Neither credit cards nor debit cards are

Question 11

$\begin{array}{|l|l|}
\hline {\text { Assets }} &{\text { Liabilities }} \
\hline \text { Reserves } & \
\$ 400 & \text { Deposits } \
\text { Loans } & \$ 1,200 \
\$ 800 & \
\text { Total } & \text { Total } \
\$ 1,200 & \$ 1,200\
\hline 
\end{array}$ 
-In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank has desired reserves of

Accepted Answer

A)  $700 million. 
B)  $120 million. 
C)  $100 million. 
D)  $0. 
A)  $700 million. 
B)  $120 million. 
C)  $100 million. 
D)  $0.

Question 12

Which of the following correctly completes this statement?
Money in the United States includes

Accepted Answer

A)  the sum of all money incomes. 
B)  the cash in banks plus the sum of all checks written. 
C)  the currency and bank deposits outside of banks. 
D)  the sum of currency, deposits, and bonds held by the public and by the banking industry. 
A)  the sum of all money incomes. 
B)  the cash in banks plus the sum of all checks written. 
C)  the currency and bank deposits outside of banks. 
D)  the sum of currency, deposits, and bonds held by the public and by the banking industry.

Question 13

M1 includes all the following items except ________.

Accepted Answer

A)  checking deposits owned by individuals and businesses 
B)  traveler's checks 
C)  deposits in money market mutual funds 
D)  currency owned by individuals and businesses 
A)  checking deposits owned by individuals and businesses 
B)  traveler's checks 
C)  deposits in money market mutual funds 
D)  currency owned by individuals and businesses

Question 14

Credit cards are not part of the nation's money supply.

Accepted Answer

A) True 
 B)False

Question 15

Excess reserves are equal to

Accepted Answer

A)  the sum of desired reserves plus any reserves that are more than are required. 
B)  actual reserves minus desired reserves. 
C)  actual reserves plus desired reserves. 
D)  desired reserves minus actual reserves. 
A)  the sum of desired reserves plus any reserves that are more than are required. 
B)  actual reserves minus desired reserves. 
C)  actual reserves plus desired reserves. 
D)  desired reserves minus actual reserves.

Question 16

The larger the public's currency drain from the banking system,the

Accepted Answer

A)  smaller is the monetary base. 
B)  smaller is the money multiplier. 
C)  larger is the monetary base. 
D)  larger is the money multiplier. 
A)  smaller is the monetary base. 
B)  smaller is the money multiplier. 
C)  larger is the monetary base. 
D)  larger is the money multiplier.

Question 17

"Because monetary policy must be approved by the president of the United States,the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

Accepted Answer

The statement is incorrect on several di

Question 18

Explain how the money market determines the equilibrium interest rate.

Accepted Answer

The demand for money curve,MD,is downwar

Question 19

Which of the following applies to the use of money as a unit of account?
I. A unit of account is an agreed measure for stating the prices of goods and services.
II. Using money as a unit of account creates a simplified pricing system.
III. Economies choose many goods as units of account.

Accepted Answer

A)  I only 
B)  II only 
C)  I and III 
D)  I and II 
A)  I only 
B)  II only 
C)  I and III 
D)  I and II

Question 20

As a unit of account,money is used to

Accepted Answer

A)  state prices of all goods and services. 
B)  pay off future debts. 
C)  hold purchasing power over time. 
D)  exchange for goods and services. 
A)  state prices of all goods and services. 
B)  pay off future debts. 
C)  hold purchasing power over time. 
D)  exchange for goods and services.

A change in the price level changes the amount of nominal money people demand.

Changing which of the following is a Federal Reserve monetary policy tool?

-The figure above illustrates the effect of

Suppose that nominal interest rates double.As a result,the quantity of money doubles as well.

The table below shows data for Japan. M1 growth rate 0.7 0.9 Inflation rate 0.4 -0.3 Assuming the rate of velocity change is constant,real GDP

On a given day the quantity of money is and the supply of money curve is .

-In the long run,when the Fed increases the quantity of money the

-In the above figure,suppose the economy is initially on the demand for money curve MD₁.What is the effect of a fall in the nominal interest rate?

The opportunity cost of holding money balances rather than other assets is

Are credit cards or debit cards money? Explain your answer.

Assets Liabilities Reserves \ 400 Deposits Loans \ 1,200 \ 800 Total Total \ 1,200 \ 1,200 -In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank has desired reserves of

Which of the following correctly completes this statement? Money in the United States includes

M1 includes all the following items except ________.

Credit cards are not part of the nation's money supply.

Excess reserves are equal to

The larger the public's currency drain from the banking system,the

"Because monetary policy must be approved by the president of the United States,the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

Explain how the money market determines the equilibrium interest rate.

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

As a unit of account,money is used to

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 8: Money, The Price Level, and Inflation

A change in the price level changes the amount of nominal money people demand.

Changing which of the following is a Federal Reserve monetary policy tool?

-The figure above illustrates the effect of

Suppose that nominal interest rates double.As a result,the quantity of money doubles as well.

The table below shows data for Japan. M1 growth rate 0.7 0.9 Inflation rate 0.4 -0.3 Assuming the rate of velocity change is constant,real GDP

On a given day the quantity of money is ________ and the supply of money curve is ________.

-In the long run,when the Fed increases the quantity of money the

-In the above figure,suppose the economy is initially on the demand for money curve MD₁.What is the effect of a fall in the nominal interest rate?

The opportunity cost of holding money balances rather than other assets is

Are credit cards or debit cards money? Explain your answer.

Assets Liabilities Reserves \ 400 Deposits Loans \ 1,200 \ 800 Total Total \ 1,200 \ 1,200 -In the balance sheet above,the entries are in millions of dollars for the FBN Bank.If the desired reserve ratio on deposits is 10 percent,FBN Bank has desired reserves of

Which of the following correctly completes this statement? Money in the United States includes

M1 includes all the following items except ________.

Credit cards are not part of the nation's money supply.

Excess reserves are equal to

The larger the public's currency drain from the banking system,the

"Because monetary policy must be approved by the president of the United States,the president is chair of the Federal Open Market Committee." Analyze the previous statement-is it correct or incorrect?

Explain how the money market determines the equilibrium interest rate.

Which of the following applies to the use of money as a unit of account? I. A unit of account is an agreed measure for stating the prices of goods and services. II. Using money as a unit of account creates a simplified pricing system. III. Economies choose many goods as units of account.

As a unit of account,money is used to

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

On a given day the quantity of money is and the supply of money curve is .