Question 1

In a model with money neutrality,a 10% increase in the money supply leads to an increase of output by

Accepted Answer

A)  more than 10%. 
B)  10%. 
C)  less than 10%, but more than zero. 
D)  zero. 
A)  more than 10%. 
B)  10%. 
C)  less than 10%, but more than zero. 
D)  zero.

Question 2

Money is neutral in the model economy we discussed because

Accepted Answer

A)  the money supply is exogenous. 
B)  the money supply is intertemporal. 
C)  prices are fully flexible. 
D)  it is a barter economy. 
A)  the money supply is exogenous. 
B)  the money supply is intertemporal. 
C)  prices are fully flexible. 
D)  it is a barter economy.

Question 3

In a model with money neutrality,a 10% increase in the money supply leads to an increase of prices by

Accepted Answer

A)  more than 10%. 
B)  10%. 
C)  less than 10%, but more than zero. 
D)  zero. 
A)  more than 10%. 
B)  10%. 
C)  less than 10%, but more than zero. 
D)  zero.

Question 4

The introduction of sweep accounts

Accepted Answer

A)  was an open market purchase. 
B)  was a failure. 
C)  had no effect. 
D)  caused a reduction in the demand for money. 
A)  was an open market purchase. 
B)  was a failure. 
C)  had no effect. 
D)  caused a reduction in the demand for money.

Question 5

Central banks sometimes attempt quantitative easing when

Accepted Answer

A)  money growth is too high. 
B)  inflation is too high. 
C)  there is a liquidity trap. 
D)  inflation is too low. 
A)  money growth is too high. 
B)  inflation is too high. 
C)  there is a liquidity trap. 
D)  inflation is too low.

Question 6

The most distinguishing economic feature of money is its

Accepted Answer

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

Question 7

An increase in the nominal interest rate increases the quantity of credit card services because

Accepted Answer

A)  bank profits go up. 
B)  of intertemporal substitution. 
C)  the opportunity cost of making transactions with money has risen. 
D)  the substitution effect is greater than the income effect. 
A)  bank profits go up. 
B)  of intertemporal substitution. 
C)  the opportunity cost of making transactions with money has risen. 
D)  the substitution effect is greater than the income effect.

Question 8

Government printing of money to finance government spending is called

Accepted Answer

A)  irresponsible. 
B)  an open-market purchase. 
C)  sterilization. 
D)  seigniorage. 
A)  irresponsible. 
B)  an open-market purchase. 
C)  sterilization. 
D)  seigniorage.

Question 9

Which of the following is included in M0,but not in M1?

Accepted Answer

A)  demand deposits 
B)  deposits of depository institutions at the Federal Reserve 
C)  currency held by the U.S. public 
D)  U.S. currency held by foreigners 
A)  demand deposits 
B)  deposits of depository institutions at the Federal Reserve 
C)  currency held by the U.S. public 
D)  U.S. currency held by foreigners

Question 10

The nominal interest rate cannot fall below

Accepted Answer

A)  the real interest rate. 
B)  the rate of growth in the money stock. 
C)  2%. 
D)  zero. 
A)  the real interest rate. 
B)  the rate of growth in the money stock. 
C)  2%. 
D)  zero.

Question 11

An increase in the money supply in the Friedman-Lucas money surprise model

Accepted Answer

A)  reduces aggregate output, raises the price level, and reduces the real interest rate. 
B)  increases aggregate output, reduces the price level, and reduces the real interest rate. 
C)  increases aggregate output, raises the price level, and reduces the real interest rate. 
D)  reduces aggregate output, raises the price level, and raises the real interest rate. 
A)  reduces aggregate output, raises the price level, and reduces the real interest rate. 
B)  increases aggregate output, reduces the price level, and reduces the real interest rate. 
C)  increases aggregate output, raises the price level, and reduces the real interest rate. 
D)  reduces aggregate output, raises the price level, and raises the real interest rate.

Question 12

In a model with money neutrality,how much should the money supply be increased to obtain a 1% increase in nominal output?

Accepted Answer

A)  -1% 
B)  between 0 and 1% 
C)  1% 
D)  It cannot be done. 
A)  -1% 
B)  between 0 and 1% 
C)  1% 
D)  It cannot be done.

Question 13

The double coincidence of wants problem is solved by

Accepted Answer

A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization. 
A)  credit markets. 
B)  government intervention. 
C)  the use of money. 
D)  specialization.

Question 14

To determine the real interest rate in the data,one should take the interest rate on government debt

Accepted Answer

A)  and leave it at that. 
B)  and add the inflation rate. 
C)  and subtract the inflation rate. 
D)  and divide by the inflation rate. 
A)  and leave it at that. 
B)  and add the inflation rate. 
C)  and subtract the inflation rate. 
D)  and divide by the inflation rate.

Question 15

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest,r is the real rate of interest,and i is the inflation rate.

Accepted Answer

A)  i = r + R 
B)  1 + i =   
C)  1 + r =   
D)  1 + r =   
A)  i = r + R 
B)  1 + i =   
C)  1 + r =   
D)  1 + r =

Question 16

The opportunity cost of holding money is

Accepted Answer

A)  zero. 
B)  the inflation rate. 
C)  the real interest rate. 
D)  the nominal interest rate. 
A)  zero. 
B)  the inflation rate. 
C)  the real interest rate. 
D)  the nominal interest rate.

Question 17

M1 includes all but which of the following?

Accepted Answer

A)  savings deposits. 
B)  currency in the hands of the public. 
C)  transactions accounts. 
D)  travelers checks. 
A)  savings deposits. 
B)  currency in the hands of the public. 
C)  transactions accounts. 
D)  travelers checks.

Question 18

The most narrowly defined monetary aggregate is

Accepted Answer

A)  M0. 
B)  M1. 
C)  M2. 
D)  L. 
A)  M0. 
B)  M1. 
C)  M2. 
D)  L.

Question 19

As means of payment currency,credit cards,and debit cards differ according to

Accepted Answer

A)  whether they pay interest. 
B)  whose liability they represent. 
C)  transactions costs. 
D)  all of the above. 
A)  whether they pay interest. 
B)  whose liability they represent. 
C)  transactions costs. 
D)  all of the above.

Question 20

The two most common types of money in circulation in the United States today consist of

Accepted Answer

A)  private bank notes and commodity-backed paper currency. 
B)  commodity-backed paper currency and fiat money. 
C)  fiat money and transaction deposits at banks. 
D)  transaction deposits at banks and commodity money. 
A)  private bank notes and commodity-backed paper currency. 
B)  commodity-backed paper currency and fiat money. 
C)  fiat money and transaction deposits at banks. 
D)  transaction deposits at banks and commodity money.

In a model with money neutrality,a 10% increase in the money supply leads to an increase of output by

Money is neutral in the model economy we discussed because

In a model with money neutrality,a 10% increase in the money supply leads to an increase of prices by

The introduction of sweep accounts

Central banks sometimes attempt quantitative easing when

The most distinguishing economic feature of money is its

An increase in the nominal interest rate increases the quantity of credit card services because

Government printing of money to finance government spending is called

Which of the following is included in M0,but not in M1?

The nominal interest rate cannot fall below

An increase in the money supply in the Friedman-Lucas money surprise model

In a model with money neutrality,how much should the money supply be increased to obtain a 1% increase in nominal output?

The double coincidence of wants problem is solved by

To determine the real interest rate in the data,one should take the interest rate on government debt

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest,r is the real rate of interest,and i is the inflation rate.

The opportunity cost of holding money is

M1 includes all but which of the following?

The most narrowly defined monetary aggregate is

As means of payment currency,credit cards,and debit cards differ according to

The two most common types of money in circulation in the United States today consist of

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work-Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 12: Money, Banking, Prices, and Monetary Policy

In a model with money neutrality,a 10% increase in the money supply leads to an increase of output by

Money is neutral in the model economy we discussed because

In a model with money neutrality,a 10% increase in the money supply leads to an increase of prices by

The introduction of sweep accounts

Central banks sometimes attempt quantitative easing when

The most distinguishing economic feature of money is its

An increase in the nominal interest rate increases the quantity of credit card services because

Government printing of money to finance government spending is called

Which of the following is included in M0,but not in M1?

The nominal interest rate cannot fall below

An increase in the money supply in the Friedman-Lucas money surprise model

In a model with money neutrality,how much should the money supply be increased to obtain a 1% increase in nominal output?

The double coincidence of wants problem is solved by

To determine the real interest rate in the data,one should take the interest rate on government debt

The Fisher relationship may be described by the following equation in which R is the nominal rate of interest,r is the real rate of interest,and i is the inflation rate.

The opportunity cost of holding money is

M1 includes all but which of the following?

The most narrowly defined monetary aggregate is

As means of payment currency,credit cards,and debit cards differ according to

The two most common types of money in circulation in the United States today consist of

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work-Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters