Question 1

If monetary neutrality holds,then an increase in the money supply

Accepted Answer

A)   increases real but not nominal variables.Most economists think that monetary neutrality is a good description of the short run.
B)   increases real but not nominal variables.Most economists think that monetary neutrality is a good description of the long run.
C)   increases nominal but not real variables.Most economists think that monetary neutrality is a good description of the short run.
D)   increases nominal but not real variables.Most economists think that monetary neutrality is a good description of the long run.E) All of the above
F) B) and D)

Question 2

The nominal interest rate is 5 percent and the real interest rate is 2 percent.What is the inflation rate?

Accepted Answer

A)   10 percent
B)   7 percent
C)   3 percent
D)   2.5 percentE) A) and B)
F) A) and D)

Question 3

Suppose each good costs $5 per unit and Megan holds $40.What is the real value of the money she holds?

Accepted Answer

A)   $40.If the price of goods rises,to maintain the real value of her money holdings she need to hold more dollars.
B)   8 units of goods.If the price of goods rises,to maintain the real value of her money holdings she needs to hold more dollars.
C)   $40.If the price of goods rises,to maintain the real value of her money holdings she need to hold fewer dollars.
D)   8 units of goods.If the price of goods rises,to maintain the real value of her money holdings she needs to hold fewer dollars.E) All of the above
F) B) and D)

Question 4

If the money supply increased by 10% and at the same time velocity decreased by 10%,then according to the quantity equation there would be no change in the price level.

Accepted Answer

A) True 
 B)False

Question 5

The costs a business incurs to change its prices are called ___________.

Accepted Answer

The answer of The costs a business incurs to change...

Question 6

When we assume that the supply of money is a variable that the central bank controls,we

Accepted Answer

A)   must then assume as well that the demand for money is not influenced by the value of money.
B)   must then assume as well that the price level is unrelated to the value of money.
C)   are ignoring the fact that,in the real world,households are also suppliers of money.
D)   are ignoring the complications introduced by the role of the banking system.E) A) and D)
F) B) and C)

Question 7

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Accepted Answer

A)   1/2
B)   2
C)   4
D)   8E) A) and B)
F) A) and C)

Exam 30: Money Growth and Inflation

If monetary neutrality holds,then an increase in the money supply

Correct Answer
verified

When we assume that the supply of money is a variable that the central bank controls,we

Correct Answer
verified

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Correct Answer
verified

Suppose each good costs $5 per unit and Megan holds $40.What is the real value of the money she holds?

Correct Answer
verified

The costs a business incurs to change its prices are called ___________.

Correct Answer
verified

The nominal interest rate is 5 percent and the real interest rate is 2 percent.What is the inflation rate?

Correct Answer
verified

If the money supply increased by 10% and at the same time velocity decreased by 10%,then according to the quantity equation there would be no change in the price level.

Correct Answer
verified

Exam 30: Money Growth and Inflation

If monetary neutrality holds,then an increase in the money supply

Correct AnswerverifiedShow Answer

When we assume that the supply of money is a variable that the central bank controls,we

Correct AnswerverifiedShow Answer

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Correct AnswerverifiedShow Answer

Suppose each good costs $5 per unit and Megan holds $40.What is the real value of the money she holds?

Correct AnswerverifiedShow Answer

The costs a business incurs to change its prices are called ___________.

Correct AnswerverifiedShow Answer

The nominal interest rate is 5 percent and the real interest rate is 2 percent.What is the inflation rate?

Correct AnswerverifiedShow Answer

If the money supply increased by 10% and at the same time velocity decreased by 10%,then according to the quantity equation there would be no change in the price level.

Correct AnswerverifiedShow Answer

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