Exam 12: Money Growth and Inflation

You put money into an account that earns a 5 percent nominal interest rate. The inflation rate is 2 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest?

When inflation rises, people tend to go to the bank

Figure 30-1 -Refer to Figure 30-1. If the current money supply is MS1, then

The inflation tax falls mostly heavily on

If M = 6,000, P = 3, and Y = 3,000, what is velocity?

Indexing the tax system to take into account the effects of inflation would by itself

Monetary neutrality means that a change in the money supply

What assumptions are necessary to argue that the quantity equation implies that increases in the money supply lead to proportional changes in the price level?

The quantity equation is expressed as _____. The rate at which money changes hands is known as _____.

When Haley states that inflation by itself always reduces the real return on her saving, she

According to the quantity theory of money, a 3 percent increase in the money supply

When inflation falls, people

Darla puts her money into a bank account that earns interest. One year later she sees that the account has 6 percent more dollars and that her money will buy 7.5 percent more goods.

If M = 9,000, P = 6, and Y = 1,500, what is velocity?

If velocity = 5, the price level = 2, and the real value of output is 2,500, then the quantity of money is

Dollar prices and relative prices are both nominal variables.

When the money market is drawn with the value of money on the vertical axis, the price level increases if

The term hyperinflation refers to

For a given real interest rate, an increase in inflation makes the after-tax real interest rate

The nominal interest rate is 6 percent and the inflation rate is 3 percent. What is the real interest rate?