Question 1

Figure 30-1  
-Refer to Figure 30-1. When the money supply curve shifts from MS1 to MS2,

Accepted Answer

A)  the demand for goods and services decreases. 
B)  the economy's ability to produce goods and services increases. 
C)  the equilibrium price level decreases. 
D)  None of the above is correct. 
A)  the demand for goods and services decreases. 
B)  the economy's ability to produce goods and services increases. 
C)  the equilibrium price level decreases. 
D)  None of the above is correct.

Question 2

In the early 1920s U.S. consumer prices fell, while Germany experienced hyperinflation. According to the ideas of shoeleather costs and menu costs, U.S. households relative to German households) made _____ frequent trips to the bank and U.S. firms changed prices _____ frequently.

Accepted Answer

The answer of In the early 1920s U.S. consumer prices...

Question 3

Interest rates adjusted for the effects of inflation

Accepted Answer

A)  and inflation are nominal variables. 
B)  and inflation are real variables. 
C)  are real variables; inflation is a nominal variable. 
D)  are nominal variables; inflation is a real variable. 
A)  and inflation are nominal variables. 
B)  and inflation are real variables. 
C)  are real variables; inflation is a nominal variable. 
D)  are nominal variables; inflation is a real variable.

Question 4

The price level is a

Accepted Answer

A)  relative variable. 
B)  dichotomous variable 
C)  real variable. 
D)  nominal variable. 
A)  relative variable. 
B)  dichotomous variable 
C)  real variable. 
D)  nominal variable.

Question 5

If the Fed increases the money supply, then 1/P

Accepted Answer

A)  falls, so the value of money falls. 
B)  falls, so the value of money rises. 
C)  rises, so the value of money falls. 
D)  rises, so the value of money rises. 
A)  falls, so the value of money falls. 
B)  falls, so the value of money rises. 
C)  rises, so the value of money falls. 
D)  rises, so the value of money rises.

Question 6

Money demand depends on

Accepted Answer

A)  the price level and the interest rate. 
B)  the price level but not the interest rate. 
C)  the interest rate but not the price level. 
D)  neither the price level nor the interest rate. 
A)  the price level and the interest rate. 
B)  the price level but not the interest rate. 
C)  the interest rate but not the price level. 
D)  neither the price level nor the interest rate.

Question 7

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

Accepted Answer

A)  The dollar price of jeans and the relative price of jeans are both nominal variables. 
B)  The dollar price of jeans and the relative price of jeans are both real variables. 
C)  The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. 
D)  The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable. 
A)  The dollar price of jeans and the relative price of jeans are both nominal variables. 
B)  The dollar price of jeans and the relative price of jeans are both real variables. 
C)  The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. 
D)  The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable.

Question 8

An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy more goods and services than she could buy last year.

Accepted Answer

A)  Her real and nominal salary have risen. 
B)  Her real and nominal salary have fallen. 
C)  Her real salary has risen and her nominal salary has fallen. 
D)  Her real salary has fallen and her nominal salary has risen. 
A)  Her real and nominal salary have risen. 
B)  Her real and nominal salary have fallen. 
C)  Her real salary has risen and her nominal salary has fallen. 
D)  Her real salary has fallen and her nominal salary has risen.

Question 9

Shoeleather cost refers to

Accepted Answer

A)  the cost of more frequent price changes induced by higher inflation. 
B)  the distortion in resource allocation created by distortions in relative prices due to inflation. 
C)  resources used to maintain lower money holdings when inflation is high. 
D)  the tendency to expend more effort searching for the lowest price when inflation is high. 
A)  the cost of more frequent price changes induced by higher inflation. 
B)  the distortion in resource allocation created by distortions in relative prices due to inflation. 
C)  resources used to maintain lower money holdings when inflation is high. 
D)  the tendency to expend more effort searching for the lowest price when inflation is high.

Question 10

Which of the following is correct?

Accepted Answer

A)  A period of hyperinflation is a period of extraordinarily low inflation. 
B)  A period of deflation is any period during which the inflation rate is decreasing. 
C)  From 2002 to 2012, U.S. inflation averaged about 2.5 percent per year. 
D)  All of the above are correct. 
A)  A period of hyperinflation is a period of extraordinarily low inflation. 
B)  A period of deflation is any period during which the inflation rate is decreasing. 
C)  From 2002 to 2012, U.S. inflation averaged about 2.5 percent per year. 
D)  All of the above are correct.

Question 11

If M = 3,000, P = 2, and Y = 6,000, what is velocity?

Accepted Answer

A)  1/4 
B)  2 
C)  4 
D)  1 
A)  1/4 
B)  2 
C)  4 
D)  1

Question 12

You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced

Accepted Answer

A)  both a nominal gain and a real gain, and you paid taxes on the nominal gain. 
B)  both a nominal gain and a real gain, and you paid taxes only on the real gain. 
C)  a nominal gain, but no real gain, and you paid taxes on the nominal gain. 
D)  a nominal gain, but no real gain, and you paid no taxes on the transaction. 
A)  both a nominal gain and a real gain, and you paid taxes on the nominal gain. 
B)  both a nominal gain and a real gain, and you paid taxes only on the real gain. 
C)  a nominal gain, but no real gain, and you paid taxes on the nominal gain. 
D)  a nominal gain, but no real gain, and you paid no taxes on the transaction.

Question 13

If the CPI rises, the number of dollars needed to buy a representative basket of goods

Accepted Answer

A)  increases, and so the value of money rises. 
B)  increases, and so the value of money falls. 
C)  decreases, and so the value of money rises. 
D)  decreases, and so the value of money falls 
A)  increases, and so the value of money rises. 
B)  increases, and so the value of money falls. 
C)  decreases, and so the value of money rises. 
D)  decreases, and so the value of money falls

Question 14

When inflation rises, the nominal interest rate

Accepted Answer

A)  rises, and people desire to hold more money. 
B)  rises, and people desire to hold less money. 
C)  falls, and people desire to hold more money. 
D)  falls, and people desire to hold less money 
A)  rises, and people desire to hold more money. 
B)  rises, and people desire to hold less money. 
C)  falls, and people desire to hold more money. 
D)  falls, and people desire to hold less money

Question 15

Which of the following helps to explain why the inflation fallacy is a fallacy?

Accepted Answer

A)  Increases in the price level can be created by increases in money demand. 
B)  Nominal incomes tend to rise at the same time that the price level is rising. 
C)  As the price level rises, the value of a dollar falls. 
D)  Inflation only changes nominal variables. 
A)  Increases in the price level can be created by increases in money demand. 
B)  Nominal incomes tend to rise at the same time that the price level is rising. 
C)  As the price level rises, the value of a dollar falls. 
D)  Inflation only changes nominal variables.

Question 16

Which movie is an allegory about late 19th century monetary policy?

Accepted Answer

A)  The Wizard of Oz 
B)  Mary Poppins 
C)  It's a Wonderful Life 
D)  Trading Places 
A)  The Wizard of Oz 
B)  Mary Poppins 
C)  It's a Wonderful Life 
D)  Trading Places

Question 17

Some countries have experienced an extraordinarily high rate of inflation known as . This is usually due to governments using money creation as a way to pay for their spending. The revenue the government raises by creating money is called the .

Accepted Answer

hyperinfla

Question 18

When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an

Accepted Answer

A)  excess demand for money, so the price level will rise. 
B)  excess demand for money, so the price level will fall. 
C)  excess supply of money, so the price level will rise. 
D)  excess supply of money, so the price level will fall. 
A)  excess demand for money, so the price level will rise. 
B)  excess demand for money, so the price level will fall. 
C)  excess supply of money, so the price level will rise. 
D)  excess supply of money, so the price level will fall.

Question 19

In which of the following cases is the after-tax real interest rate highest?

Accepted Answer

A)  inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 20%. 
B)  inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 25%. 
C)  inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 20%. 
D)  inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 25%. 
A)  inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 20%. 
B)  inflation is 6%, the pre-tax real interest rate is 3%, and the tax rate is 25%. 
C)  inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 20%. 
D)  inflation is 4%, the pre-tax real interest rate is 2%, and the tax rate is 25%.

Question 20

When inflation causes relative-price variability,

Accepted Answer

A)  consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired. 
B)  consumer decisions are distorted, but markets are still able to efficiently allocate factors of production. 
C)  consumer decisions are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. 
D)  consumer decisions are not distorted and markets are still able to efficiently allocate factors of production. 
A)  consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired. 
B)  consumer decisions are distorted, but markets are still able to efficiently allocate factors of production. 
C)  consumer decisions are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. 
D)  consumer decisions are not distorted and markets are still able to efficiently allocate factors of production.

Figure 30-1 -Refer to Figure 30-1. When the money supply curve shifts from MS1 to MS2,

In the early 1920s U.S. consumer prices fell, while Germany experienced hyperinflation. According to the ideas of shoeleather costs and menu costs, U.S. households relative to German households) made _ frequent trips to the bank and U.S. firms changed prices _ frequently.

Interest rates adjusted for the effects of inflation

The price level is a

If the Fed increases the money supply, then 1/P

Money demand depends on

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy more goods and services than she could buy last year.

Shoeleather cost refers to

Which of the following is correct?

If M = 3,000, P = 2, and Y = 6,000, what is velocity?

You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced

If the CPI rises, the number of dollars needed to buy a representative basket of goods

When inflation rises, the nominal interest rate

Which of the following helps to explain why the inflation fallacy is a fallacy?

Which movie is an allegory about late 19th century monetary policy?

Some countries have experienced an extraordinarily high rate of inflation known as . This is usually due to governments using money creation as a way to pay for their spending. The revenue the government raises by creating money is called the .

When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an

In which of the following cases is the after-tax real interest rate highest?

When inflation causes relative-price variability,

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Exam 12: Money Growth and Inflation

Figure 30-1 -Refer to Figure 30-1. When the money supply curve shifts from MS1 to MS2,

In the early 1920s U.S. consumer prices fell, while Germany experienced hyperinflation. According to the ideas of shoeleather costs and menu costs, U.S. households relative to German households) made _____ frequent trips to the bank and U.S. firms changed prices _____ frequently.

Interest rates adjusted for the effects of inflation

The price level is a

If the Fed increases the money supply, then 1/P

Money demand depends on

When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts.

An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy more goods and services than she could buy last year.

Shoeleather cost refers to

Which of the following is correct?

If M = 3,000, P = 2, and Y = 6,000, what is velocity?

You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced

If the CPI rises, the number of dollars needed to buy a representative basket of goods

When inflation rises, the nominal interest rate

Which of the following helps to explain why the inflation fallacy is a fallacy?

Which movie is an allegory about late 19th century monetary policy?

Some countries have experienced an extraordinarily high rate of inflation known as . This is usually due to governments using money creation as a way to pay for their spending. The revenue the government raises by creating money is called the .

When the money market is drawn with the value of money on the vertical axis, if the price level is below the equilibrium level, there is an

In which of the following cases is the after-tax real interest rate highest?

When inflation causes relative-price variability,

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

In the early 1920s U.S. consumer prices fell, while Germany experienced hyperinflation. According to the ideas of shoeleather costs and menu costs, U.S. households relative to German households) made _ frequent trips to the bank and U.S. firms changed prices _ frequently.