Question 1

The costs of changing price tags and price listings are known as

Accepted Answer

A)   inflation-induced tax distortions.
B)   relative-price variability costs.
C)   shoeleather costs.
D)   menu costs.E) All of the above
F) B) and D)

Question 2

The supply of money increases when

Accepted Answer

A)   the price level falls.
B)   the interest rate increases.
C)   the Fed makes open-market purchases.
D)   money demand increases.E) None of the above
F) A) and B)

Question 3

Hyperinflation is generally defined as inflation that exceeds 50 percent per month.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that M is fixed. According to the quantity equation, which of the following would make the price level higher?

Accepted Answer

A)   Y or V rise
B)   Y or V fall
C)   Y rises or V falls
D)   Y falls or V risesE) A) and C)
F) B) and C)

Question 5

The value of money falls. This might be because the Federal Reserve

Accepted Answer

A)   bought bonds, which increased the money supply.
B)   bought bonds, which decreased the money supply.
C)   sold bonds, which increased the money supply.
D)   sold bonds, which decreased the money supply.E) C) and D)
F) None of the above

Question 6

In early 2008, the central bank of Zimbabwe announced the inflation rate in that country had reached

Accepted Answer

A)   60 percent.
B)   80 percent.
C)   220 percent.
D)   24,000 percent.E) None of the above
F) A) and D)

Question 7

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

Accepted Answer

A)   real GDP
B)   unemployment
C)   nominal interest rates
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 8

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. What quantity is measured along the vertical axis?

Accepted Answer

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

Question 9

The term hyperinflation refers to

Accepted Answer

A)   the spread of inflation from one country to others.
B)   a decrease in the inflation rate.
C)   a period of very high inflation.
D)   inflation accompanied by a recession.E) B) and D)
F) B) and C)

Question 10

When Haley states that inflation by itself always reduces the real return on her saving, she

Accepted Answer

A)   has expressed the idea of the inflation tax.
B)   has expressed the idea behind menu costs.
C)   has committed the inflation fallacy.
D)   has expressed the idea behind shoeleather costs.E) B) and C)
F) A) and D)

Question 11

The increase in the overall level of prices is known as .

Accepted Answer

The answer of The increase in the overall level of...

Question 12

The data on hyperinflation show a clear link between the quantity of money and

Accepted Answer

A)   the price level.
B)   growth rate of GDP.
C)   unemployment rate.
D)   velocity.E) All of the above
F) B) and C)

Question 13

In which case is velocity the highest?

Accepted Answer

A)   the price level equals 4, the money supply equals 5,000, and output equals 20,000.
B)   the price level equals 4, the money supply equals 20,000 and output equals 5,000.
C)   the price level equals 2, the money supply equals 5,000, and output equals 20,000.
D)   the price level equals 2, the money supply equals 20,000 and output equals 5,000.E) A) and C)
F) A) and D)

Question 14

Shoeleather costs and menu costs are both costs of anticipated inflation.

Accepted Answer

A) True 
 B)False

Question 15

When inflation rises, people will desire to hold

Accepted Answer

A)   less money and will go to the bank less frequently.
B)   less money and will go to the bank more frequently.
C)   more money and will go to the bank less frequently.
D)   more money and will go to the bank more frequently.E) None of the above
F) A) and B)

Question 16

An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?

Accepted Answer

Both the nominal and real valu...

Question 17

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

Accepted Answer

A)   demanded increases.
B)   demanded decreases.
C)   supplied increases.
D)   supplied decreases.E) B) and D)
F) C) and D)

Question 18

Which of the following statements concerning the history of U.S. inflation is not correct?

Accepted Answer

A)   Prices rose at an average annual rate of about 3.6 percent over the last 80 years.
B)   There was about a 17-fold increase in the price level over the last 80 years.
C)   Inflation in the 1970s was below the average over the last 80 years.
D)   The United States has experienced periods of deflation.E) B) and C)
F) A) and D)

Question 19

The country of Lessidinia has a tax system identical to that of the United States. Suppose someone in Lessidinia bought a parcel of land for 20,000 foci the local currency)  in 1960 when the price index equaled 100. In 2002, the person sold the land for 100,000 foci, and the price index equaled 600. The tax rate on nominal gains was 20 percent. Compute the taxes on the nominal gain and the change in the real value of the land in terms of 2002 prices to find the after-tax real rate of capital gain.

Accepted Answer

A)   -60 percent
B)   -30 percent
C)   30 percent
D)   60 percentE) B) and D)
F) A) and B)

Question 20

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

Exam 17: Money Growth and Inflation

Correct Answer
verified

The costs of changing price tags and price listings are known as

Correct Answer
verified

In which case is velocity the highest?

Correct Answer
verified

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

Correct Answer
verified

The term hyperinflation refers to

Correct Answer
verified

When inflation rises, people will desire to hold

Correct Answer
verified

The data on hyperinflation show a clear link between the quantity of money and

Correct Answer
verified

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. What quantity is measured along the vertical axis?

Correct Answer
verified

Suppose that M is fixed. According to the quantity equation, which of the following would make the price level higher?

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

The increase in the overall level of prices is known as .

Correct Answer
verified

The supply of money increases when

Correct Answer
verified

Hyperinflation is generally defined as inflation that exceeds 50 percent per month.

Correct Answer
verified

In early 2008, the central bank of Zimbabwe announced the inflation rate in that country had reached

Correct Answer
verified

When Haley states that inflation by itself always reduces the real return on her saving, she

Correct Answer
verified

Which of the following statements concerning the history of U.S. inflation is not correct?

Correct Answer
verified

An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?

Correct Answer
verified
Both the nominal and real valu...
View Answer

The value of money falls. This might be because the Federal Reserve

Correct Answer
verified

Shoeleather costs and menu costs are both costs of anticipated inflation.

Correct Answer
verified

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

Correct Answer
verified

Exam 17: Money Growth and Inflation

Correct AnswerverifiedShow Answer

The costs of changing price tags and price listings are known as

Correct AnswerverifiedShow Answer

In which case is velocity the highest?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The term hyperinflation refers to

Correct AnswerverifiedShow Answer

When inflation rises, people will desire to hold

Correct AnswerverifiedShow Answer

The data on hyperinflation show a clear link between the quantity of money and

Correct AnswerverifiedShow Answer

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. What quantity is measured along the vertical axis?

Correct AnswerverifiedShow Answer

Suppose that M is fixed. According to the quantity equation, which of the following would make the price level higher?

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

The increase in the overall level of prices is known as .

Correct AnswerverifiedShow Answer

The supply of money increases when

Correct AnswerverifiedShow Answer

Hyperinflation is generally defined as inflation that exceeds 50 percent per month.

Correct AnswerverifiedShow Answer

In early 2008, the central bank of Zimbabwe announced the inflation rate in that country had reached

Correct AnswerverifiedShow Answer

When Haley states that inflation by itself always reduces the real return on her saving, she

Correct AnswerverifiedShow Answer

Which of the following statements concerning the history of U.S. inflation is not correct?

Correct AnswerverifiedShow Answer

An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6. Today the price of x is $8 and the price of y is $10. What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?

Correct AnswerverifiedBoth the nominal and real valu...View AnswerShow Answer

The value of money falls. This might be because the Federal Reserve

Correct AnswerverifiedShow Answer

Shoeleather costs and menu costs are both costs of anticipated inflation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
verified
Both the nominal and real valu...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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