Exam 15: The Distribution of Income and Poverty

Under a gold standard,if the market price of gold is above the official price of gold (set by the monetary authority),people will be more likely to sell gold __________________,which will cause the money supply to _______________ and the price level.to _______________.

Suppose that an individual can hold her wealth in only two forms: money and bonds.A _______________ in the bond market would then imply that there is a ________________ in the money market.

According to the monetarist transmission mechanism,a decrease in the supply of money will result in

Activists believe that

Which of the following statements is true?

Under a gold standard,if the market price of gold is below the official price of gold (set by the monetary authority)members of the public would likely buy gold _______________ and sell it __________________,causing the market price of gold to ____________________.

Suppose that one year ago you purchased a $1,000 bond with an interest payment of $40 per year and,at the time,the interest rate was 4 percent.One year later the interest rate on bonds has increased to 5 percent,and you still hold the bond you purchased a year ago.If you were to sell your bond now,the price that you could sell it for would be

-Refer to Exhibit 15-2.If the interest rate is i₂ and the relevant money supply curve is S₁,then there is a

Under a constant growth rate of money rule of 2 percent in an economy in which Real GDP grows at an average rate of 1 percent and velocity is constant,the inflation rate is

If a country's rules-based monetary policy sets the annual money supply growth rate equal to the average annual growth rate of Real GDP,and velocity is a constant,then the price level

The Taylor Rule provides policymakers with a target for

Suppose a constant-money-growth-rate rule of 3 percent is being considered.If it is estimated that average annual Real GDP growth is 3.5 percent and it turns out that velocity is rising by 2 percent a year on average,the rule would produce an average annual rate of inflation of __________ percent.

-Refer to Exhibit 15-3.The economy is initially at point 1.Ideally,__________ monetary policy will move the economy to point __________.

The economy is in a recessionary gap and there is complete crowding out.Furthermore,there is no evidence that the economy is in a liquidity trap or that investment is interest-insensitive.This makes the case for the use of __________ policy stronger than it might be otherwise.

A person who opposes the deliberate use of fiscal and monetary policies is called a(n)

Which of the following statements is true?

Economist Jones favors a constant-money-growth-rate rule.She says that if the annual money supply growth rate each year is equal to the average annual growth rate in Real GDP,price stability will exist over time.What would economist Smith,who favors activist monetary policy,say to economist Jones?

A change in the money supply will change investment when

According to Keynesians,__________ monetary policy will not remove the economy from a(an)__________ gap if __________.

-Refer to Exhibit 15-4.Identify the appropriate state of the bond market that would fill in blanks (A),(B),and (C),respectively.