Question 1

The liquidity,income,price-level,and expectations effects help to explain how changes in ________________can affect _______________.

Accepted Answer

A)  the money supply; the interest rate 
B)  velocity; the interest rate 
C)  the interest rate; the money supply 
D)  velocity; Real GDP 
E)  Real GDP; the money supply 
A)  the money supply; the interest rate 
B)  velocity; the interest rate 
C)  the interest rate; the money supply 
D)  velocity; Real GDP 
E)  Real GDP; the money supply

Question 2

Which of the following statements is true?

Accepted Answer

A)  Velocity equals the money supply. 
B)  GDP is larger than the money supply if velocity is greater than 1. 
C)  The money supply must be equal to GDP. 
D)  GDP is always twice the money supply. 
A)  Velocity equals the money supply. 
B)  GDP is larger than the money supply if velocity is greater than 1. 
C)  The money supply must be equal to GDP. 
D)  GDP is always twice the money supply.

Question 3

According to the simple quantity theory of money in the AD-AS framework,when the money supply decreases,the result is __________ in Real GDP and __________ in the price level.

Accepted Answer

A)  no change; no change 
B)  a rise; no change 
C)  no change; a rise 
D)  a rise; a fall 
E)  no change; a fall 
A)  no change; no change 
B)  a rise; no change 
C)  no change; a rise 
D)  a rise; a fall 
E)  no change; a fall

Question 4

A decrease in the interest rate due to an increase in the supply of loanable funds is referred to as the __________ effect.

Accepted Answer

A)  expectations 
B)  liquidity 
C)  income 
D)  a and c 
E)  a,b and c 
A)  expectations 
B)  liquidity 
C)  income 
D)  a and c 
E)  a,b and c

Question 5

In the equation of exchange,the money supply multiplied by velocity equals

Accepted Answer

A)  GDP. 
B)  the price level. 
C)  the quantity of goods produced. 
D)  the average number of times that a dollar is used to purchase a final good or service. 
A)  GDP. 
B)  the price level. 
C)  the quantity of goods produced. 
D)  the average number of times that a dollar is used to purchase a final good or service.

Question 6

Explain in detail how the California gold rush contributed to rising prices in the early 1850's.

Accepted Answer

The discovery and mining of gold in Cali

Question 7

A change in the interest rate resulting from a change in the supply of loanable funds is called the expectations effect.

Accepted Answer

A) True 
 B)False

Question 8

Monetarists believe that

Accepted Answer

A)  velocity changes in a predictable way. 
B)  aggregate supply depends on the money supply and velocity. 
C)  the SRAS curve is upward sloping. 
D)  a and c 
E)  a,b and c 
A)  velocity changes in a predictable way. 
B)  aggregate supply depends on the money supply and velocity. 
C)  the SRAS curve is upward sloping. 
D)  a and c 
E)  a,b and c

Question 9

In the equation of exchange,"Q" stands for

Accepted Answer

A)  the interest rate. 
B)  quality. 
C)  GDP. 
D)  Real GDP. 
A)  the interest rate. 
B)  quality. 
C)  GDP. 
D)  Real GDP.

Question 10

One-shot inflation is always caused by a decrease in short-run aggregate supply.

Accepted Answer

A) True 
 B)False

Question 11

In the equation of exchange,the average number of times a dollar is used to purchase a final good or service is the __________ of money.

Accepted Answer

A)  turnover 
B)  elasticity 
C)  velocity 
D)  transfer 
A)  turnover 
B)  elasticity 
C)  velocity 
D)  transfer

Question 12

One-shot inflation can be caused by

Accepted Answer

A)  increases in aggregate demand only. 
B)  decreases in aggregate supply only. 
C)  either increases in aggregate demand or decreases in aggregate supply. 
D)  neither increases in aggregate demand nor decreases in aggregate supply. 
A)  increases in aggregate demand only. 
B)  decreases in aggregate supply only. 
C)  either increases in aggregate demand or decreases in aggregate supply. 
D)  neither increases in aggregate demand nor decreases in aggregate supply.

Question 13

-Refer to Exhibit 14-1.Starting from point A,a one shot,supply-side-induced inflation raises the price level in the economy to P2.Assuming no other changes,in the long run the economy is likely to settle at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 14

If the Fed increases its open market purchases of government securities,it exerts a downward pressure on the interest rate.Such a phenomenon is usually referred to as the ___________________ effect.

Accepted Answer

A)  income 
B)  substitution 
C)  open market 
D)  liquidity 
E)  expectations 
A)  income 
B)  substitution 
C)  open market 
D)  liquidity 
E)  expectations

Question 15

-Refer to Exhibit 14-1.Starting from point A,a one-shot,demand-side-induced inflation raises the price level in the economy to P2.Assuming no other changes,in the long run the economy is likely to settle at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E. 
A)  A. 
B)  B. 
C)  C. 
D)  D. 
E)  E.

Question 16

According to the equation of exchange,if GDP equals $400 billion and the money supply equals $50 billion,the velocity of money

Accepted Answer

A)  must be 8. 
B)  must be 4. 
C)  must be 0.8 billion. 
D)  must be 450 billion. 
E)  cannot be determined without knowing what the price level is. 
A)  must be 8. 
B)  must be 4. 
C)  must be 0.8 billion. 
D)  must be 450 billion. 
E)  cannot be determined without knowing what the price level is.

Question 17

Which of the following is consistent with the equation of exchange?

Accepted Answer

A)  Total spending must equal the total sales revenues of business firms. 
B)  The money supply multiplied by velocity must equal GDP. 
C)  The money supply multiplied by velocity must equal the price level times Real GDP. 
D)  a and b 
E)  a,b and c 
A)  Total spending must equal the total sales revenues of business firms. 
B)  The money supply multiplied by velocity must equal GDP. 
C)  The money supply multiplied by velocity must equal the price level times Real GDP. 
D)  a and b 
E)  a,b and c

Question 18

If the money supply is $6,000,velocity is 5,and Real GDP is 10,000 units of output,then the price level is _____________.If the money supply doubled over a short time period to $12,000,the simple quantity theory of money would predict that _____________________.

Accepted Answer

A)  $3; the price level would double 
B)  $3; Real GDP would double 
C)  $3; the price level would be cut in half 
D)  $2; the price level would double 
A)  $3; the price level would double 
B)  $3; Real GDP would double 
C)  $3; the price level would be cut in half 
D)  $2; the price level would double

Question 19

If GDP is $36,000 and velocity is 3,the money supply is

Accepted Answer

A)  $27,000. 
B)  $12,000. 
C)  $4,000. 
D)  $3,000. 
E)  There is not enough information provided to answer this question. 
A)  $27,000. 
B)  $12,000. 
C)  $4,000. 
D)  $3,000. 
E)  There is not enough information provided to answer this question.

Question 20

The simple quantity theory of money predicts that changes in

Accepted Answer

A)  the money supply lead to strictly proportional changes in the price level. 
B)  the money supply do not affect the price level. 
C)  the price level lead to strictly proportional changes in velocity and GDP. 
D)  velocity lead to nearly proportional changes in the money supply. 
A)  the money supply lead to strictly proportional changes in the price level. 
B)  the money supply do not affect the price level. 
C)  the price level lead to strictly proportional changes in velocity and GDP. 
D)  velocity lead to nearly proportional changes in the money supply.

Exam 14: Wages,union,and Labor

The liquidity,income,price-level,and expectations effects help to explain how changes in ________________can affect _______________.

Which of the following statements is true?

According to the simple quantity theory of money in the AD-AS framework,when the money supply decreases,the result is __________ in Real GDP and __________ in the price level.

A decrease in the interest rate due to an increase in the supply of loanable funds is referred to as the __________ effect.

In the equation of exchange,the money supply multiplied by velocity equals

Explain in detail how the California gold rush contributed to rising prices in the early 1850's.

A change in the interest rate resulting from a change in the supply of loanable funds is called the expectations effect.

Monetarists believe that

In the equation of exchange,"Q" stands for

One-shot inflation is always caused by a decrease in short-run aggregate supply.

In the equation of exchange,the average number of times a dollar is used to purchase a final good or service is the __________ of money.

One-shot inflation can be caused by

-Refer to Exhibit 14-1.Starting from point A,a one shot,supply-side-induced inflation raises the price level in the economy to P2.Assuming no other changes,in the long run the economy is likely to settle at point

If the Fed increases its open market purchases of government securities,it exerts a downward pressure on the interest rate.Such a phenomenon is usually referred to as the ___________________ effect.

-Refer to Exhibit 14-1.Starting from point A,a one-shot,demand-side-induced inflation raises the price level in the economy to P2.Assuming no other changes,in the long run the economy is likely to settle at point

According to the equation of exchange,if GDP equals $400 billion and the money supply equals $50 billion,the velocity of money

Which of the following is consistent with the equation of exchange?

If the money supply is $6,000,velocity is 5,and Real GDP is 10,000 units of output,then the price level is _____________.If the money supply doubled over a short time period to $12,000,the simple quantity theory of money would predict that _____________________.

If GDP is $36,000 and velocity is 3,the money supply is

The simple quantity theory of money predicts that changes in

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

The liquidity,income,price-level,and expectations effects help to explain how changes in __can affect _.

According to the simple quantity theory of money in the AD-AS framework,when the money supply decreases,the result is in Real GDP and in the price level.

-Refer to Exhibit 14-1.Starting from point A,a one shot,supply-side-induced inflation raises the price level in the economy to P₂.Assuming no other changes,in the long run the economy is likely to settle at point

-Refer to Exhibit 14-1.Starting from point A,a one-shot,demand-side-induced inflation raises the price level in the economy to P₂.Assuming no other changes,in the long run the economy is likely to settle at point

If the money supply is $6,000,velocity is 5,and Real GDP is 10,000 units of output,then the price level is _.If the money supply doubled over a short time period to $12,000,the simple quantity theory of money would predict that _________.