Question 1

If your salary increased by 8 percent and prices increased by 4 percent,how much did your real wage rise by?

Accepted Answer

A)   3 percent
B)   4 percent
C)   6 percent
D)   8 percentE) A) and B)
F) A) and C)

Question 2

According to the classical dichotomy,what increases when the money supply increases?

Accepted Answer

A)   the real interest rate
B)   the real GDP
C)   the value of money
D)   the price levelE) A) and D)
F) None of the above

Question 3

If velocity and output were nearly constant,the inflation rate would be equal to the money supply growth rate times what factor?

Accepted Answer

A)   -2
B)   -1
C)   1
D)   2E) C) and D)
F) B) and D)

Question 4

Suppose that the Government of Canada unexpectedly decided to pay off its debt by printing new money.What would happen?

Accepted Answer

A)   People who held money would feel richer.
B)   Prices who held government bonds would feel richer.
C)   People who lent money at a fixed interest rate would feel richer.
D)   People who borrowed money at a fixed interest rate would feel richer.E) B) and C)
F) A) and D)

Question 5

How can inflation be measured?

Accepted Answer

A)   by the change in the consumer price index
B)   by the percentage change in the consumer price index
C)   by the percentage change in nominal GDP
D)   by the change in the price of a specific commodityE) None of the above
F) C) and D)

Question 6

As the price level decreases,what happens to the value of money?

Accepted Answer

A)   It increases,so people want to hold more of it.
B)   It increases,so people want to hold less of it.
C)   It decreases,so people want to hold more of it.
D)   It decreases,so people want to hold less of it.E) All of the above
F) A) and D)

Question 7

Refer to the following:
a.The central bank of the Republic of Moldova needs to determine by how much to increase the money supply next year,if they estimate an increase in the overall economic activity (real GDP)of 2.5 percent and have a target inflation rate of 4 percent.The velocity of money has been observed to be constant over the past many years.If you were a consultant to the government,what would your advice be?
b.Next year,the National Bank of Moldova wishes to reduce inflation to 2 percent,and estimates an increase in real GDP by 1.5 percent.What should be the change in the money supply?

Accepted Answer

a)Using the approximate formula ÄM / M +...

Question 8

Assume you buy some stock and its price rises less than the price level.What is the result of your purchase?

Accepted Answer

A)   a nominal and real gain
B)   a nominal and real loss
C)   a nominal loss and a real gain
D)   a nominal gain and a real lossE) C) and D)
F) B) and C)

Question 9

Which statement best characterizes the effects of monetary policy?

Accepted Answer

A)   Monetary policy is neutral in both the short run and the long run; therefore,it does not affect real variables.
B)   Monetary policy is neutral in the long run,but it may have effects on real variables in the short run.
C)   Monetary policy has profound effects on real variables in both the short run and the long run.
D)   Monetary policy has profound effects on real variables in the long run,but is neutral in the short run.E) None of the above
F) A) and D)

Question 10

Using separate graphs,demonstrate what happens to the money supply,money demand,the value of money,and the price level if:
a.the Bank of Canada increases the money supply.
b.people decide to demand less money at each value of money.

Accepted Answer

a.The Bank of Canada increases the money...

Question 11

According to the classical dichotomy,what is influenced by monetary factors?

Accepted Answer

A)   real GDP
B)   investment
C)   nominal interest rates
D)   the real wage rateE) A) and B)
F) A) and C)

Question 12

When and where did hyperinflation occur?

Accepted Answer

A)   during 1880-1896 in the United States
B)   in post-World War I Germany
C)   during the 1970s in Canada
D)   during 1930-1933 in the United StatesE) A) and B)
F) B) and C)

Question 13

Monica buys a bond for $750 and then sells it later for $950.What type of gain is Monica's experience?

Accepted Answer

A)   a net gain
B)   a real interest gain
C)   a capital gain
D)   an inflation tax gainE) C) and D)
F) A) and B)

Question 14

You put money in an account and earn a real interest rate of 10 percent.Inflation is 4 percent,and your marginal tax rate is 40 percent.What is your after-tax real interest rate?

Accepted Answer

A)   1.8 percent
B)   2.4 percent
C)   3.2 percent
D)   4.4 percentE) All of the above
F) B) and D)

Question 15

What type of variable is the price level?

Accepted Answer

A)   quantitative
B)   controlled
C)   real
D)   nominalE) A) and D)
F) All of the above

Exam 11: Money Growth and Inflation

When and where did hyperinflation occur?

Correct Answer
verified

Monica buys a bond for $750 and then sells it later for $950.What type of gain is Monica's experience?

Correct Answer
verified

If velocity and output were nearly constant,the inflation rate would be equal to the money supply growth rate times what factor?

Correct Answer
verified

What type of variable is the price level?

Correct Answer
verified

Which statement best characterizes the effects of monetary policy?

Correct Answer
verified

Assume you buy some stock and its price rises less than the price level.What is the result of your purchase?

Correct Answer
verified

If your salary increased by 8 percent and prices increased by 4 percent,how much did your real wage rise by?

Correct Answer
verified

Using separate graphs,demonstrate what happens to the money supply,money demand,the value of money,and the price level if: a.the Bank of Canada increases the money supply. b.people decide to demand less money at each value of money.

Correct Answer
verified
a.The Bank of Canada increases the money...
View Answer

According to the classical dichotomy,what increases when the money supply increases?

Correct Answer
verified

You put money in an account and earn a real interest rate of 10 percent.Inflation is 4 percent,and your marginal tax rate is 40 percent.What is your after-tax real interest rate?

Correct Answer
verified

How can inflation be measured?

Correct Answer
verified

Suppose that the Government of Canada unexpectedly decided to pay off its debt by printing new money.What would happen?

Correct Answer
verified

Correct Answer
verified
a)Using the approximate formula ÄM / M +...
View Answer

As the price level decreases,what happens to the value of money?

Correct Answer
verified

According to the classical dichotomy,what is influenced by monetary factors?

Correct Answer
verified

Exam 11: Money Growth and Inflation

When and where did hyperinflation occur?

Correct AnswerverifiedShow Answer

Monica buys a bond for $750 and then sells it later for $950.What type of gain is Monica's experience?

Correct AnswerverifiedShow Answer

If velocity and output were nearly constant,the inflation rate would be equal to the money supply growth rate times what factor?

Correct AnswerverifiedShow Answer

What type of variable is the price level?

Correct AnswerverifiedShow Answer

Which statement best characterizes the effects of monetary policy?

Correct AnswerverifiedShow Answer

Assume you buy some stock and its price rises less than the price level.What is the result of your purchase?

Correct AnswerverifiedShow Answer

If your salary increased by 8 percent and prices increased by 4 percent,how much did your real wage rise by?

Correct AnswerverifiedShow Answer

Using separate graphs,demonstrate what happens to the money supply,money demand,the value of money,and the price level if: a.the Bank of Canada increases the money supply. b.people decide to demand less money at each value of money.

Correct Answerverifieda.The Bank of Canada increases the money...View AnswerShow Answer

According to the classical dichotomy,what increases when the money supply increases?

Correct AnswerverifiedShow Answer

You put money in an account and earn a real interest rate of 10 percent.Inflation is 4 percent,and your marginal tax rate is 40 percent.What is your after-tax real interest rate?

Correct AnswerverifiedShow Answer

How can inflation be measured?

Correct AnswerverifiedShow Answer

Suppose that the Government of Canada unexpectedly decided to pay off its debt by printing new money.What would happen?

Correct AnswerverifiedShow Answer

Correct Answerverifieda)Using the approximate formula ÄM / M +...View AnswerShow Answer

As the price level decreases,what happens to the value of money?

Correct AnswerverifiedShow Answer

According to the classical dichotomy,what is influenced by monetary factors?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.The Bank of Canada increases the money...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a)Using the approximate formula ÄM / M +...
View Answer

Correct Answer
verified

Correct Answer
verified