Exam 12: Money Growth and Inflation

One year ago Sam purchased bonds for $100,000. He just sold them for $120,000. During the year the price level rose by 5%. If the tax rate on capital gains is 20%, how much did Sam gain in real terms?

The theory that most economists rely on to explain inflation is called the .

During hyperinflations, people desire to hold less money and will go to the bank more frequently. This waste of resources due to the high rate of inflation is known as .

If the real interest rate is 5% and the inflation rate is 3%, then the nominal interest rate is 8%.

The costs of changing price tags and price listings are known as

As the Consumer Price Index increases, the value of money

If the value of a dollar falls, then the quantity of money demanded

Which of the following is not implied by the quantity equation?

One study found that unemployment is the economic term mentioned most often in U.S. newspapers.

The real interest rate is 4 percent and the nominal interest rate is 6 percent. Is there inflation or deflation? What is the inflation or deflation rate?

People can reduce the inflation tax by

Monetary neutrality implies that an increase in the quantity of money will

During the 2008 financial crisis velocity decreased. This means that the rate at which money changed hands

When the money market is drawn with the value of money on the vertical axis, the money demand curve slopes

Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had expected it to be. The real interest rate she pays is

If real output in an economy is 1,000 goods per year, the money supply is $300, and each dollar is spent an average of 4 times per year, then according to the quantity equation, the average price level is

The classical dichotomy argues that changes in the money supply

Which of the following is accurate?

The consumer price index increases from 200 to 208. What is the inflation rate?

According to the assumptions of the quantity theory of money, if the money supply decreases by 7 percent, then