Exam 12: Money Growth and Inflation

During the 1970's, U.S. inflation averaged 7% each year and real GDP increased. Holding velocity constant and using the Quantity Equation, we conclude that

When the money market is drawn with the value of money on the vertical axis, an increase in the money supply shifts the money supply curve to the

If the quantity of money supplied is greater than the quantity demanded, then prices should fall.

You put money into an account and earn a real interest rate of 4 percent. Inflation is 2 percent, and your marginal tax rate is 25 percent. What is your after-tax real rate of interest?

According to the assumptions of the quantity theory of money, if the money supply increases 5 percent, then

High and unexpected inflation has a greater cost

According to the classical dichotomy, which of the following is influenced by monetary factors?

According to the assumptions of the quantity theory of money, if the money supply increases 5 percent, then

Inflation necessarily distorts saving when either real interest income or nominal interest income is taxed.

According to the classical dichotomy, when the money supply doubles, which of the following also doubles?

In 1975 tuition at Wattsomata University was $2,500 and the consumer price index was 80. In 2011 tuition was $12,000 and the price index was 320. Which of the following is correct?

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

Figure 30-2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. -Refer to Figure 30-2. What quantity is measured along the horizontal axis?

If velocity is 6, real output is 10,000, and M is 20,000 what would the price level be? If M increases to 25,000 but V and Y do not change, what happens to the price level? Are the change in the money supply and the change in the price level proportional?

When the value of money is on the vertical axis, an increase in the price level shifts money demand to the right.

When the Federal Reserve injects money into the banking system, it initially causes an excess _____ of money. Equilibrium in the money market is reestablished through an) _____ in the price level.

Your boss gives you an increase in the number of dollars you earn per hour. This increase in pay makes

In the U.S., from the early 1980s through the early 1990s,

If money demand shifts right, the price level falls.

If inflation is lower than what was expected,