Exam 30: Money Growth and Inflation

When the value of money is on the vertical axis, the money supply curve is vertical and shifts right if the Federal Reserve buys bonds.

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. Suppose the relevant money-demand curve is the one labeled MD1; also suppose the velocity of money is 4. If the money market is in equilibrium, then the economy's real GDP amounts to

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?

When the money market is drawn with the value of money on the vertical axis, if the value of money is above the equilibrium level,

You put money into an account and earn an after-tax real interest rate of 2.5 percent. If the nominal interest rate on the account is 8 percent and the inflation rate is 2 percent, then what is the tax rate?

When the money market is drawn with the value of money on the vertical axis, an increase in the money supply creates an excess

Figure 30-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes. -Refer to Figure 30-3. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased their money supplies. The central banks might have done this by

In the 1990s, U.S. prices rose at about the same rate as in the 1970s.

According to the classical dichotomy and money neutrality, a doubling of the money supply, holding all else constant, causes prices to and real GDP to .

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.

The supply of money increases when

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

When inflation rises, people tend to go to the bank

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

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

Suppose the United States unexpectedly decided to pay off its debt by printing new money. Which of the following would happen?

On its web site, your bank posts the interest rates it is paying on savings accounts. Those posted rates

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

The idea that nominal variables are heavily influenced by the quantity of money and that money is largely irrelevant for understanding the determinants of real variables is called the