Exam 8: Money, the Price Level, and Inflation

The Federal Reserve System

What makes up M1? Is M1 larger or smaller than real GDP?

M1 is a measure of

The Federal Open Market Committee (FOMC)

In the list of assets below, which is the most liquid?

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

The quantity of money that people choose to hold depends on which of the following? I.The price level II.Financial innovation III.The exchange rate

When price levels rise, the quantity of nominal money demanded will ________ and the quantity of real money demanded will ________.

The quantity of money in an economy is $9 million, and the velocity of circulation is 3. Nominal GDP in this economy is ________.

The "double coincidence of wants" problem is

The difference between actual reserves and required reserves is

In September 2008, Regions Bank has $89 million in M1 deposits, $3 million in reserves and $81 million in loans. Regions Bank's desired reserve ratio is

The fraction of deposits that banks are required to keep is known as the

The sale of $1 billion of securities to a bank or some other business by the Fed is an example of

Are checks and credit cards money? Explain why or why not.

The Federal Reserve reports that it has coins valued at $10 billion, bank reserves at the Fed of $15 billion, gold valued at $10 billion, Federal Reserve notes of $400 billion, and U.S. government securities of $300 billion. What is the size of the monetary base?

Which of the following is NOT included in M1?

Fisheria is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology. In 2010, real GDP was $300 million, the quantity of money was $60, and the velocity of circulation of money was 10. In 2015, the price level rose by 20 percent. a)What was the price level in 2014? (The price level is measured by the GDP deflator, which is 100 in the base year. So the price level from the equation of exchange needs to be multiplied by 100 to convert it to the GDP deflator.) b)What was real GDP in 2015? c)What was the velocity of circulation in 2015? d)What was the quantity of money in 2015?

Money's function as a medium of exchange means that

Friedmania is a country in which the quantity theory of money operates. The country has a constant population, capital stock, and technology so real GDP does not change. In 2014, real GDP was $500 million, the price level, measured by the GDP deflator, was 150 and the velocity of circulation of money was 10. (Because the price level is measured by the GDP deflator, it must be divided by 100 before it is used in the equation of exchange.)In 2015, the quantity of money increased by 20 percent. a)What was the quantity of money in 2014? b)What was the velocity of circulation in 2015? c)What was the price level in 2015?