Exam 18: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

When money demand increases, the Fed cannot keep both the money supply from rising and the interest rate from rising.

Which of the following is not a limitation to monetary policy?​

When the supply of money is vertical, changes in money demand will not change the equilibrium quantity of money in existence.

If economic recovery has already occurred by the time the effects of expansionary monetary policy are felt, it could cause an inflation problem rather than curing a recession problem.

According to the growth version of the quantiy theory of money, the growth rate of the money supply equals the inflation rate plus the growth rate of real output.

Above the equilibrium nominal interest rate, there is a surplus of money.​

When Fed policy is being used to offset a contractionary gap, which of the following variables decreases as a result?

Higher rates of anticipated inflation would tend to:​

If the Fed sells bonds, the short run impact of this policy will tend to include:

If commercial banks are increasing their borrowing from the Fed while the Fed is selling government securities, the borrowing of the commercial banks from the Fed will tend to:

The quantity of money demanded varies ____ with the nominal interest rate, but the supply of money is almost perfectly ____ with respect to nominal interest rates.

If the demand for money decreases, but the Fed keeps the money supply the same:​

The money supply and money demand curves are _____ and ______ respectively.

Ceteris paribus, which of the following situations would result in the largest quantity of money demanded?

When the economy is on the flatter part of the short run aggregate supply curve, efforts to change inflation with monetary policy will be ____ successful and efforts to stimulate the economy will be ____ successful.

If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?

Based on the situation depicted in the graph below, which of the following would be an appropriate monetary policy response?

If the economy's real GDP is growing at 3 percent each year and velocity is constant, for the price level to increase:

The Fed can force the banking system to decrease the money supply by tightening monetary policy, but it cannot force the banking system to increase the money supply by loosening monetary policy.

Quantitative easing involved Fed purchases of long term securities rather than short term securities.​