Question 1

Suppose over some period of time the money supply tripled,velocity doubled,and real GDP doubled.According to the quantity equation the price level is now

Accepted Answer

A)  6 times its old value.
B)  3 times its old value.
C)  1.5 times its old value.
D)  0.75 times its old value.E) A) and C)
F) B) and C)

Question 2

Figure 30-3.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes. 1;also suppose the economy's real GDP is 30,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately A) 3.0 B) 6.0 C) 9.0 D) 1.5" class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 30-3.Suppose the relevant money-supply curve is the one labeled MS1;also suppose the economy's real GDP is 30,000 for the year.If the money market is in equilibrium,then the velocity of money is approximately

Accepted Answer

A)  3.0
B)  6.0
C)  9.0
D)  1.5E) B) and D)
F) A) and B)

Question 3

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.What quantity is measured along the horizontal axis?

Accepted Answer

A)  the price level
B)  the real interest rate
C)  the value of money
D)  the quantity of moneyE) A) and C)
F) All of the above

Question 4

If P denotes the price of goods and services measured in terms of money,then

Accepted Answer

A)  1/P represents the value of money measured in terms of goods and services.
B)  P can be interpreted as the inflation rate.
C)  the supply of money influences the value of P,but the demand for money does not.
D)  All of the above are correct.E) B) and D)
F) A) and B) A

Question 5

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

Accepted Answer

A)  real output growth
B)  real interest rates
C)  nominal interest rates
D)  the money supply divided by the price levelE) A) and D)
F) C) and D)

Question 6

In the fourteenth century,the Western African Emperor Kankan Musa traveled to Cairo where he gave away much gold,which was in use as a medium of exchange.We would predict that this increase in gold

Accepted Answer

A)  raised both the price level and the value of gold in Cairo.
B)  raised the price level,but decreased the value of gold in Cairo.
C)  lowered the price level,but increased the value of gold in Cairo.
D)  lowered both the price level and the value of gold in Cairo.E) A) and B)
F) A) and C)

Question 7

The value of money rises as the price level

Accepted Answer

A)  rises,because the number of dollars needed to buy a representative basket of goods rises.
B)  rises,because the number of dollars needed to buy a representative basket of goods falls.
C)  falls,because the number of dollars needed to buy a representative basket of goods rises.
D)  falls,because the number of dollars needed to buy a representative basket of goods falls.E) B) and C)
F) All of the above D

Question 8

Figure 30-1 2 and the value of money is 2,then there is an excess A) demand for money that is represented by the distance between points A and C. B) demand for money that is represented by the distance between points A and B. C) supply of money that is represented by the distance between points A and C. D) supply of money that is represented by the distance between points A and B." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 30-1.If the money supply is MS2 and the value of money is 2,then there is an excess

Accepted Answer

A)  demand for money that is represented by the distance between points A and C.
B)  demand for money that is represented by the distance between points A and B.
C)  supply of money that is represented by the distance between points A and C.
D)  supply of money that is represented by the distance between points A and B.E) None of the above
F) All of the above D

Question 9

Figure 30-2.On the graph,MS represents the money supply and MD represents money demand.The usual quantities are measured along the axes. 1;also suppose the velocity of money is 4.If the money market is in equilibrium,then the economy's real GDP amounts to A) 2,500. B) 7,500. C) 10,000. D) 40,000." class="answers-bank-image d-inline" rel="preload" >
-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

Accepted Answer

A)  2,500.
B)  7,500.
C)  10,000.
D)  40,000.E) C) and D)
F) A) and D)

Question 10

When the money market is drawn with the value of money on the vertical axis,the value of money decreases if

Accepted Answer

A)  either money demand or money supply shifts right.
B)  either money demand or money supply shifts left.
C)  money demand shifts right or money supply shifts left.
D)  money demand shifts left or money supply shifts right.E) C) and D)
F) B) and D)

Question 11

Ashley puts money in a savings account at her bank earning 2 percent interest.One year later she takes her money out and notes that prices rose 3 percent.Ashley earned a

Accepted Answer

A)  ​real interest rate of -1 percent due to inflation.
B)  ​real interest rate of 1 percent due to inflation.
C)  ​nominal interest rate of -1 percent due to inflation.
D)  ​nominal interest rate of 1 percent due to inflation.E) All of the above
F) None of the above

Question 12

If Y and M are constant and V doubles,the quantity equation implies that the price level

Accepted Answer

A)  falls to half its original level.
B)  doubles.
C)  more than doubles.
D)  does not change.E) A) and C)
F) A) and B)

Question 13

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)  the value of money.
B)  real interest rates.
C)  nominal interest rates.
D)  the money supply.E) B) and D)
F) C) and D)

Question 14

The price level rises if either

Accepted Answer

A)  money demand shifts rightward or money supply shifts leftward;this rise in the price level is associated with a rise in the value of money.
B)  money demand shifts rightward or money supply shifts leftward;this rise in the price level is associated with a fall in the value of money.
C)  money demand shifts leftward or money supply shifts rightward;this rise in the price level is associated with a rise in the value of money.
D)  money demand shifts leftward or money supply shifts rightward;this rise in the price level is associated with a fall in the value of money.E) None of the above
F) All of the above

Question 15

When the money market is drawn with the value of money on the vertical axis,the price level increases if

Accepted Answer

A)  either money demand or money supply shifts right.
B)  either money demand or money supply shifts left.
C)  money demand shifts right or money supply shifts left.
D)  money demand shifts left or money supply shifts right.E) None of the above
F) A) and C)

Question 16

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

Accepted Answer

A)  the inflation rate and real interest rates.
B)  the inflation rate,but not real interest rates.
C)  real interest rates,but not the inflation rate.
D)  neither the inflation rate nor real interest rates.E) A) and B)
F) C) and D)

Question 17

According to the classical dichotomy,which of the following is influenced by monetary factors?

Accepted Answer

A)  the real wage.
B)  the real interest rate.
C)  the nominal interest rate.
D)  All of the above are correct.E) A) and D)
F) C) and D)

Question 18

When deflation exists,

Accepted Answer

A)  the real interest rate is less than the nominal interest rate.
B)  the real interest rate is greater than the nominal interest rate.
C)  the real interest rate and inflation are less than the nominal interest rate.
D)  prices rise.E) A) and D)
F) A) and C)

Question 19

The economy of Mainland uses gold as its money.If the government discovers a large reserve of gold on their land

Accepted Answer

A)  the supply of money decreases and the value of money rises.
B)  the supply of money increases and the value of money falls.
C)  the demand for money increases and the value of money rises.
D)  the demand for money decreases and the value of money falls.E) A) and B)
F) A) and D)

Question 20

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Accepted Answer

A)  Austria in the 1920's.
B)  Hungary in the 1920's.
C)  Poland in the 1920's.
D)  All of the above are correct.E) A) and B)
F) None of the above

Exam 17: Money Growth and Inflation: The Classical Theory of Inflation

Suppose over some period of time the money supply tripled,velocity doubled,and real GDP doubled.According to the quantity equation the price level is now

Correct Answer
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Correct Answer
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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.What quantity is measured along the horizontal axis?

Correct Answer
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If P denotes the price of goods and services measured in terms of money,then

Correct Answer
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A

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

Correct Answer
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In the fourteenth century,the Western African Emperor Kankan Musa traveled to Cairo where he gave away much gold,which was in use as a medium of exchange.We would predict that this increase in gold

Correct Answer
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The value of money rises as the price level

Correct Answer
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D

Figure 30-1 -Refer to Figure 30-1.If the money supply is MS₂ and the value of money is 2,then there is an excess

Correct Answer
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D

Correct Answer
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When the money market is drawn with the value of money on the vertical axis,the value of money decreases if

Correct Answer
verified

Ashley puts money in a savings account at her bank earning 2 percent interest.One year later she takes her money out and notes that prices rose 3 percent.Ashley earned a

Correct Answer
verified

If Y and M are constant and V doubles,the quantity equation implies that the price level

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

The price level rises if either

Correct Answer
verified

When the money market is drawn with the value of money on the vertical axis,the price level increases if

Correct Answer
verified

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

Correct Answer
verified

According to the classical dichotomy,which of the following is influenced by monetary factors?

Correct Answer
verified

When deflation exists,

Correct Answer
verified

The economy of Mainland uses gold as its money.If the government discovers a large reserve of gold on their land

Correct Answer
verified

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Correct Answer
verified

Exam 17: Money Growth and Inflation: The Classical Theory of Inflation

Suppose over some period of time the money supply tripled,velocity doubled,and real GDP doubled.According to the quantity equation the price level is now

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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.What quantity is measured along the horizontal axis?

Correct AnswerverifiedShow Answer

If P denotes the price of goods and services measured in terms of money,then

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

In the fourteenth century,the Western African Emperor Kankan Musa traveled to Cairo where he gave away much gold,which was in use as a medium of exchange.We would predict that this increase in gold

Correct AnswerverifiedShow Answer

The value of money rises as the price level

Correct AnswerverifiedD

Figure 30-1 -Refer to Figure 30-1.If the money supply is MS2 and the value of money is 2,then there is an excess

Correct AnswerverifiedD

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis,the value of money decreases if

Correct AnswerverifiedShow Answer

Ashley puts money in a savings account at her bank earning 2 percent interest.One year later she takes her money out and notes that prices rose 3 percent.Ashley earned a

Correct AnswerverifiedShow Answer

If Y and M are constant and V doubles,the quantity equation implies that the price level

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

The price level rises if either

Correct AnswerverifiedShow Answer

When the money market is drawn with the value of money on the vertical axis,the price level increases if

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the classical dichotomy,which of the following is influenced by monetary factors?

Correct AnswerverifiedShow Answer

When deflation exists,

Correct AnswerverifiedShow Answer

The economy of Mainland uses gold as its money.If the government discovers a large reserve of gold on their land

Correct AnswerverifiedShow Answer

Evidence concerning hyperinflation indicates a clear link between the money supply and the price level for

Correct AnswerverifiedShow Answer

Correct Answer
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A

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D

Figure 30-1 -Refer to Figure 30-1.If the money supply is MS₂ and the value of money is 2,then there is an excess

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D

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