Question 1

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

Accepted Answer

A)   The Wizard of Oz
B)   Mary Poppins
C)   It's a Wonderful Life
D)   Trading PlacesE) A) and B)
F) A) and C)

Question 2

Given a nominal interest rate of 6 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

Accepted Answer

A)   Inflation is 2.5 percent; the tax rate is 25 percent.
B)   Inflation is 3 percent; the tax rate is 20 percent.
C)   Inflation is 2 percent; the tax rate is 30 percent.
D)   The after-tax real interest rate is the same for all of the above.E) C) and D)
F) B) and C)

Question 3

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

Accepted Answer

A)   both the price level and nominal GDP would rise by 5 percent.
B)   the price level would rise by 5 percent and nominal GDP would be unchanged.
C)   the price level would be unchanged and nominal GDP would rise by 5 percent.
D)   both the price level and nominal GDP would be unchanged.E) A) and D)
F) All of the above

Question 4

When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve buys bonds, then the money supply curve

Accepted Answer

A)   shifts rightward, causing the value of money measured in terms of goods and services to rise.
B)   shifts rightward, causing the value of money measured in terms of goods and services to fall.
C)   shifts leftward, causing the value of money measured in terms of goods and services to rise.
D)   shifts leftward, causing the value of money measured in terms of goods and services to fall.E) All of the above
F) B) and C)

Question 5

Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 6 percent?

Accepted Answer

A)   a real interest rate of 3 percent and an inflation rate of 2 percent.
B)   a real interest rate of 7 percent and an inflation rate of 1 percent.
C)   a real interest rate of 5 percent and an inflation rate of 1 percent.
D)   a real interest rate of 6 percent and an inflation rate of 1 percent.E) None of the above
F) A) and D)

Question 6

In 2010 the U.S. government was running a large deficit. Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit. If the Fed were to buy government bonds to help the government finance its expenditures, then

Accepted Answer

A)   the price level would fall, so the value of money would fall.
B)   the price level would fall, so the value of money would rise.
C)   the price level would rise, so the value of money would fall.
D)   the price level would rise, so the value of money would rise.E) B) and D)
F) A) and D)

Question 7

When the money market is drawn with the value of money on the vertical axis, long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal due to adjustments in

Accepted Answer

A)   nominal interest rates.
B)   real interest rates.
C)   the price level.
D)   the money supply.E) C) and D)
F) None of the above

Exam 17: Money Growth and Inflation

Given a nominal interest rate of 6 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve buys bonds, then the money supply curve

Correct Answer
verified

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

Correct Answer
verified

In 2010 the U.S. government was running a large deficit. Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit. If the Fed were to buy government bonds to help the government finance its expenditures, then

Correct Answer
verified

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

Correct Answer
verified

Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 6 percent?

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis, long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal due to adjustments in

Correct Answer
verified

Exam 17: Money Growth and Inflation

Given a nominal interest rate of 6 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis, if the Federal Reserve buys bonds, then the money supply curve

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2010 the U.S. government was running a large deficit. Some were concerned that pressures might be put on the Federal Reserve to purchase government bonds to help the government finance this deficit. If the Fed were to buy government bonds to help the government finance its expenditures, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 6 percent?

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis, long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal due to adjustments in

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified