Question 1

The quantity theory of money is the idea that in the long run

Accepted Answer

A)  the quantity of money is determined by banks. 
B)  the quantity of money serves as a good indicator of how well money functions as a store of value. 
C)  the quantity of money determines real GDP. 
D)  an increase in the growth rate of the quantity of money leads to an equal increase in the inflation rate. 
A)  the quantity of money is determined by banks. 
B)  the quantity of money serves as a good indicator of how well money functions as a store of value. 
C)  the quantity of money determines real GDP. 
D)  an increase in the growth rate of the quantity of money leads to an equal increase in the inflation rate.

Question 2

The quantity theory of money states that

Accepted Answer

A)  inflation increases when the money growth rate increases. 
B)  as the price level increases, the demand for money increases. 
C)  as the interest rate rises, the demand for money decreases. 
D)  changes in the quantity of money are determined by the commercial banks and not the Federal Reserve. 
A)  inflation increases when the money growth rate increases. 
B)  as the price level increases, the demand for money increases. 
C)  as the interest rate rises, the demand for money decreases. 
D)  changes in the quantity of money are determined by the commercial banks and not the Federal Reserve.

Question 3

An asset category that caries the highest interest rate is

Accepted Answer

A)  checkable deposit accounts. 
B)  loans. 
C)  cash in the bank vault. 
D)  savings deposits. 
A)  checkable deposit accounts. 
B)  loans. 
C)  cash in the bank vault. 
D)  savings deposits.

Question 4

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

Accepted Answer

According to the quantity theo

Question 5

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves ________.

Accepted Answer

A)  increase 
B)  do not change 
C)  are greater than 100 percent 
D)  decrease 
A)  increase 
B)  do not change 
C)  are greater than 100 percent 
D)  decrease

Question 6

When you bought your textbook for this course, you were using money as a

Accepted Answer

A)  store of value. 
B)  price mechanism. 
C)  medium of exchange. 
D)  unit of account. 
A)  store of value. 
B)  price mechanism. 
C)  medium of exchange. 
D)  unit of account.

Question 7

The current chairman of the Federal Reserve System is

Accepted Answer

A)  Ben Bernanke. 
B)  Alan Greenspan. 
C)  President Obama. 
D)  Janet Yellen. 
A)  Ben Bernanke. 
B)  Alan Greenspan. 
C)  President Obama. 
D)  Janet Yellen.

Question 8

Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?

Accepted Answer

A)  People buy bonds, the price of bonds rises and the interest rate rises. 
B)  People buy bonds, the price of bonds falls and the interest rate rises. 
C)  People sell bonds, the price of bonds rises and the interest rate rises. 
D)  People sell bonds, the price of bonds falls and the interest rate rises. 
A)  People buy bonds, the price of bonds rises and the interest rate rises. 
B)  People buy bonds, the price of bonds falls and the interest rate rises. 
C)  People sell bonds, the price of bonds rises and the interest rate rises. 
D)  People sell bonds, the price of bonds falls and the interest rate rises.

Question 9

Are checks money?

Accepted Answer

Checks are instructions to transfer fund

Question 10

The table below shows data for Indonesia.
 
Assuming the rate of velocity change is constant, the money growth rate in Indonesia was

Accepted Answer

A)  0.3 percent in 2009. 
B)  11.7 percent in 2010. 
C)  -0.3 percent in 2009. 
D)  5.7 percent in 2010. 
A)  0.3 percent in 2009. 
B)  11.7 percent in 2010. 
C)  -0.3 percent in 2009. 
D)  5.7 percent in 2010.

Question 11

Which of the following is an example of money functioning as a store of value?

Accepted Answer

A)  Comcast charging $99 for internet, phone and cable service. 
B)  McDonalds charging 99 cents for a burger. 
C)  Your saving your spare change in a jar in order to afford an end-of-term party. 
D)  Amazon.com charging $9.95 for shipping. 
A)  Comcast charging $99 for internet, phone and cable service. 
B)  McDonalds charging 99 cents for a burger. 
C)  Your saving your spare change in a jar in order to afford an end-of-term party. 
D)  Amazon.com charging $9.95 for shipping.

Question 12

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

Accepted Answer

A)  V, the velocity of circulation. 
B)  P, the price level. 
C)  Y, real GDP. 
D)  R, the interest rate. 
A)  V, the velocity of circulation. 
B)  P, the price level. 
C)  Y, real GDP. 
D)  R, the interest rate.

Question 13

If there is an excess quantity of money, people will buy bonds.

Accepted Answer

A) True 
 B)False

Question 14

The velocity of circulation is

Accepted Answer

A)  the rate of change of the GDP deflator. 
B)  the average number of times a dollar of money is used in a year to buy goods and services in GDP. 
C)  the changes in the purchasing power of money over a given time period. 
D)  constant. 
A)  the rate of change of the GDP deflator. 
B)  the average number of times a dollar of money is used in a year to buy goods and services in GDP. 
C)  the changes in the purchasing power of money over a given time period. 
D)  constant.

Question 15

A highly liquid asset

Accepted Answer

A)  has high transaction costs associated with its sale. 
B)  is highly leveraged. 
C)  generally has a very limited market for its resale. 
D)  can be converted into a means of payment easily without loss of value. 
A)  has high transaction costs associated with its sale. 
B)  is highly leveraged. 
C)  generally has a very limited market for its resale. 
D)  can be converted into a means of payment easily without loss of value.

Question 16

If actual reserves are 100 when deposits are 400, then definitely the desired reserve ratio is 0.25.

Accepted Answer

A) True 
 B)False

Question 17

How are the nominal and real demands for money related to changes in the price level?

Accepted Answer

When the price level rises the nominal d

Question 18

Which of the following counts as part of money?

Accepted Answer

A)  $10,000 in gold bars 
B)  $10,000 in government bonds 
C)  $10,000 in a checking account 
D)  $10,000 in corporate bonds 
A)  $10,000 in gold bars 
B)  $10,000 in government bonds 
C)  $10,000 in a checking account 
D)  $10,000 in corporate bonds

Question 19

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to ________.

Accepted Answer

A)  $50 
B)  $500 
C)  $450 
D)  $2,500 
A)  $50 
B)  $500 
C)  $450 
D)  $2,500

Question 20

The term "currency drain" refers to an increase in currency held outside banks.

Accepted Answer

A) True 
 B)False

The quantity theory of money is the idea that in the long run

The quantity theory of money states that

An asset category that caries the highest interest rate is

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves ________.

When you bought your textbook for this course, you were using money as a

The current chairman of the Federal Reserve System is

Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?

Are checks money?

The table below shows data for Indonesia. Assuming the rate of velocity change is constant, the money growth rate in Indonesia was

Which of the following is an example of money functioning as a store of value?

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

If there is an excess quantity of money, people will buy bonds.

The velocity of circulation is

A highly liquid asset

If actual reserves are 100 when deposits are 400, then definitely the desired reserve ratio is 0.25.

How are the nominal and real demands for money related to changes in the price level?

Which of the following counts as part of money?

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to ________.

The term "currency drain" refers to an increase in currency held outside banks.

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 8: Money, the Price Level, and Inflation

The quantity theory of money is the idea that in the long run

The quantity theory of money states that

An asset category that caries the highest interest rate is

According to the quantity theory of money, what is the effect of an increase in the quantity of money?

If a customer deposits $10,000 in currency into a checking account, the bank's total reserves ________.

When you bought your textbook for this course, you were using money as a

The current chairman of the Federal Reserve System is

Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?

Are checks money?

The table below shows data for Indonesia. Assuming the rate of velocity change is constant, the money growth rate in Indonesia was

Which of the following is an example of money functioning as a store of value?

According to the quantity theory of money, a 25 percent change in M, the quantity of money, leads to a 25 percent change in

If there is an excess quantity of money, people will buy bonds.

The velocity of circulation is

A highly liquid asset

If actual reserves are 100 when deposits are 400, then definitely the desired reserve ratio is 0.25.

How are the nominal and real demands for money related to changes in the price level?

Which of the following counts as part of money?

-The table shows the balance sheet for Ralph's Bank. If the desired reserve ratio is 15 percent, the maximum additional amount that Ralph's Bank can loan is equal to ________.

The term "currency drain" refers to an increase in currency held outside banks.

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters