Exam 17: Money Growth and Inflation

Harvey, a U.S. taxpayer, purchased 10 shares of MVC stock for $100 per share; one year later he sold the 10 shares for $130 a share. Over the year, the price level increased from 140.0 to 147.0. What is Harvey's before­tax real capital gain?

Shawn puts money into an account. One year later he sees that he has 6 percent more dollars and that his money will buy 5 percent more goods.

Suppose that monetary neutrality and the Fisher effect both hold. An increase in the money supply growth rate increases

Jackie saves $100 and receives $106 the next year. During the same year, the price of the basket of goods that she purchases increases from $100 to $104. What is nominal interest rate on Jackie's saving? What is the real interest rate on Jackie's saving? What was the inflation rate?

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 .

In the long run an increase in the money supply causes the price level to __________. The price level moves in this direction because an increase in the money supply creates __________ in the money market that causes people to ________ spending.

The United States has never had deflation.

Other things the same, an increase in velocity means that

When the money supply and the price level in countries that experienced hyperinflation are plotted on a graph against time, we see that

When the money market is drawn with the value of money on the vertical axis, if money supply and money demand both shift to the right

In the U.S., taxes are paid on one's _____ gains/returns. Therefore, a _____ inflation rate encourages more saving.

When the money market is drawn with the value of money on the vertical axis, a decrease in the money supply leads people to

When money is neutral, which of the following increases when the money supply growth rate increases?

You put money into an account and earn a real interest rate of 6 percent. Inflation is 3 percent, and your marginal tax rate is 20 percent. What is your after-tax real rate of interest?

If the price level were to rise from 160 to 200, in what direction and by how much would the value of a dollar change?

The classical dichotomy argues that changes in the money supply

According to the classical dichotomy, which of the following is not influenced by monetary factors?

Which of the following are U.S. taxpayers allowed to adjust for inflation for the purpose of income taxes?

The classical theory of inflation

Over the past 80 years, prices in the U.S. have risen on average about