Question 1

In the equation of exchange,what does V represent?

Accepted Answer

A) The reciprocal of the price level. 
B) The reciprocal of the money multiplier. 
C) The quantity of real output. 
D) The number of times per year the average dollar is spent. 
E) The value or purchasing power of the dollar. 
A) The reciprocal of the price level. 
B) The reciprocal of the money multiplier. 
C) The quantity of real output. 
D) The number of times per year the average dollar is spent. 
E) The value or purchasing power of the dollar.

Question 2

-Refer to the graph above to answer this question.Under what circumstance would the money demand curve in the diagram shift leftward?

Accepted Answer

A) If the asset demand for money increased. 
B) If the transactions demand for money increased. 
C) If the price level increased. 
D) If nominal GDP increased. 
E) If the price level decreased. 
A) If the asset demand for money increased. 
B) If the transactions demand for money increased. 
C) If the price level increased. 
D) If nominal GDP increased. 
E) If the price level decreased.

Question 3

If real GDP is $600 billion,the price level is 1.2 and the velocity of money is 5,then what is the money supply?

Accepted Answer

A) $100 billion. 
B) $3,600 billion. 
C) $144 billion. 
D) $2,500. 
E) It cannot be determined from the information. 
A) $100 billion. 
B) $3,600 billion. 
C) $144 billion. 
D) $2,500. 
E) It cannot be determined from the information.

Question 4

What will happen to the demand for money if the price level decreased and nominal GDP increased? Explain.

Accepted Answer

The rise in nominal GDP will i

Question 5

On a diagram with the interest rate on the vertical axis and the quantity of money demanded on the horizontal axis,what can the asset demand for money be shown as?

Accepted Answer

A) A line parallel to the horizontal axis. 
B) A vertical line. 
C) A curve sloping downwards from left to right. 
D) A curve sloping upwards from left to right. 
E) It cannot be shown on such a diagram. 
A) A line parallel to the horizontal axis. 
B) A vertical line. 
C) A curve sloping downwards from left to right. 
D) A curve sloping upwards from left to right. 
E) It cannot be shown on such a diagram.

Question 6

If there is a shortage of money in the economy,the Bank of Canada will increase the amount supplied.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following accurately describes Milton Friedman?

Accepted Answer

A) He was a classical economist and contemporary of Adam Smith. 
B) He popularized monetarism. 
C) He advanced Keynesian analysis of Say's Law. 
D) He followed Keynes into the British civil service. 
E) He is considered the father of modern economics. 
A) He was a classical economist and contemporary of Adam Smith. 
B) He popularized monetarism. 
C) He advanced Keynesian analysis of Say's Law. 
D) He followed Keynes into the British civil service. 
E) He is considered the father of modern economics.

Question 8

Is the money demand curve according to Monetarists relatively steep or flat? Explain.

Accepted Answer

The money demand curve for the Monetaris

Question 9

When does the Bank of Canada make a loan to a commercial bank?

Accepted Answer

A) If the bank doesn't have deposit insurance. 
B) If the bank is experiencing a liquidity problem. 
C) If the bank has high profits. 
D) If the bank is willing to pay an interest rate above the prime rate. 
E) The Bank of Canada doesn't loan money to commercial banks. 
A) If the bank doesn't have deposit insurance. 
B) If the bank is experiencing a liquidity problem. 
C) If the bank has high profits. 
D) If the bank is willing to pay an interest rate above the prime rate. 
E) The Bank of Canada doesn't loan money to commercial banks.

Question 10

The transactions demand for money is determined by how much money people need.

Accepted Answer

A) True 
 B)False

Question 11

The desire of people to hold money as a store of wealth describes what type of money demand?

Accepted Answer

A) The asset demand for money. 
B) The transactions demand for money. 
C) The investment demand. 
D) The velocity of circulation. 
A) The asset demand for money. 
B) The transactions demand for money. 
C) The investment demand. 
D) The velocity of circulation.

Question 12

What is the link between the money market and the product market?

Accepted Answer

A) Money supply. 
B) The price level. 
C) Interest rates. 
D) Consumption. 
A) Money supply. 
B) The price level. 
C) Interest rates. 
D) Consumption.

Question 13

Explain why the money demand curve is downward sloping.

Accepted Answer

The money demand curve is downward slopi

Question 14

The desire of people to hold money as a medium of exchange describes what type of money demand?

Accepted Answer

A) The asset demand for money. 
B) The transactions demand for money. 
C) The investment demand. 
D) The velocity of circulation. 
A) The asset demand for money. 
B) The transactions demand for money. 
C) The investment demand. 
D) The velocity of circulation.

Question 15

All of the following items,except one,are part of the equation of exchange.Which is the exception?

Accepted Answer

A) Real output. 
B) The interest rate. 
C) The money supply. 
D) The velocity of money. 
E) The price level. 
A) Real output. 
B) The interest rate. 
C) The money supply. 
D) The velocity of money. 
E) The price level.

Question 16

-Refer to the graph above to answer this question.Suppose that the economy is in equilibrium and each dollar held for transactions purposes is spent on average four times per year,what can we infer from this?

Accepted Answer

A) That nominal GDP is $800. 
B) That real GDP is $1,000. 
C) That the money supply is $800. 
D) That nominal GDP is $400. 
A) That nominal GDP is $800. 
B) That real GDP is $1,000. 
C) That the money supply is $800. 
D) That nominal GDP is $400.

Question 17

-Refer to the graph above to answer this question.Which curve represents the transactions demand for money?

Accepted Answer

A) MD1. 
B) MD2. 
C) MD3. 
D) MS. 
A) MD1. 
B) MD2. 
C) MD3. 
D) MS.

Question 18

What is the equation of exchange?

Accepted Answer

A) MV = PQ. 
B) Y = AE. 
C) M = 1/RR. 
D) C + I + Xn + G = Y. 
E) MQ = PV. 
A) MV = PQ. 
B) Y = AE. 
C) M = 1/RR. 
D) C + I + Xn + G = Y. 
E) MQ = PV.

Question 19

-Refer to figure above to answer this question.What is the effect of an increase in the supply of money from 160 to 200?

Accepted Answer

A) An increase of 4 percentage points in the interest rate. 
B) A decrease in the transactions demand for money. 
C) A decrease of 40 in investment spending. 
D) An increase of 40 in investment spending. 
E) An increase of 20 in investment spending. 
A) An increase of 4 percentage points in the interest rate. 
B) A decrease in the transactions demand for money. 
C) A decrease of 40 in investment spending. 
D) An increase of 40 in investment spending. 
E) An increase of 20 in investment spending.

Question 20

"An increase in rate of interest will decrease the demand for money." Evaluate this statement.

Accepted Answer

This statement is incorrect.An increase

In the equation of exchange,what does V represent?

-Refer to the graph above to answer this question.Under what circumstance would the money demand curve in the diagram shift leftward?

If real GDP is $600 billion,the price level is 1.2 and the velocity of money is 5,then what is the money supply?

What will happen to the demand for money if the price level decreased and nominal GDP increased? Explain.

On a diagram with the interest rate on the vertical axis and the quantity of money demanded on the horizontal axis,what can the asset demand for money be shown as?

If there is a shortage of money in the economy,the Bank of Canada will increase the amount supplied.

Which of the following accurately describes Milton Friedman?

Is the money demand curve according to Monetarists relatively steep or flat? Explain.

When does the Bank of Canada make a loan to a commercial bank?

The transactions demand for money is determined by how much money people need.

The desire of people to hold money as a store of wealth describes what type of money demand?

What is the link between the money market and the product market?

Explain why the money demand curve is downward sloping.

The desire of people to hold money as a medium of exchange describes what type of money demand?

All of the following items,except one,are part of the equation of exchange.Which is the exception?

-Refer to the graph above to answer this question.Suppose that the economy is in equilibrium and each dollar held for transactions purposes is spent on average four times per year,what can we infer from this?

-Refer to the graph above to answer this question.Which curve represents the transactions demand for money?

What is the equation of exchange?

-Refer to figure above to answer this question.What is the effect of an increase in the supply of money from 160 to 200?

"An increase in rate of interest will decrease the demand for money." Evaluate this statement.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 9: The Money Market and Monetary Policy

In the equation of exchange,what does V represent?

-Refer to the graph above to answer this question.Under what circumstance would the money demand curve in the diagram shift leftward?

If real GDP is $600 billion,the price level is 1.2 and the velocity of money is 5,then what is the money supply?

What will happen to the demand for money if the price level decreased and nominal GDP increased? Explain.

On a diagram with the interest rate on the vertical axis and the quantity of money demanded on the horizontal axis,what can the asset demand for money be shown as?

If there is a shortage of money in the economy,the Bank of Canada will increase the amount supplied.

Which of the following accurately describes Milton Friedman?

Is the money demand curve according to Monetarists relatively steep or flat? Explain.

When does the Bank of Canada make a loan to a commercial bank?

The transactions demand for money is determined by how much money people need.

The desire of people to hold money as a store of wealth describes what type of money demand?

What is the link between the money market and the product market?

Explain why the money demand curve is downward sloping.

The desire of people to hold money as a medium of exchange describes what type of money demand?

All of the following items,except one,are part of the equation of exchange.Which is the exception?

-Refer to the graph above to answer this question.Suppose that the economy is in equilibrium and each dollar held for transactions purposes is spent on average four times per year,what can we infer from this?

-Refer to the graph above to answer this question.Which curve represents the transactions demand for money?

What is the equation of exchange?

-Refer to figure above to answer this question.What is the effect of an increase in the supply of money from 160 to 200?

"An increase in rate of interest will decrease the demand for money." Evaluate this statement.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

International Trade

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters