FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 30: Money Growth and Inflation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

One study found that unemployment is the economic term mentioned most often in U.S. newspapers.

A) True
B) False

Correct Answer

verified

False

Question 2

True/False

Review LaterAdd Note

Review Later

Monetary neutrality means that while real variables may change in response to changes in the money supply, nominal variables do not.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

True/False

Review LaterAdd Note

In the presence of inflation in the U.S., accountants incorrectly measure firms' earnings but the tax code correctly measures real incomes.

The money demand curve is downward sloping because as the value of money falls people desire to hold a larger quantity of money.

The price level is a

The classical dichotomy says that two groups of variables are affected by different forces. What are these two groups of variables?

Explain how inflation affects savings.

The price level is determined by the supply of, and demand for, money.

The supply of money increases when

Figure 30-1 -Refer to Figure 30-1. When the money supply curve shifts from MS₁ to MS₂,

In the long run, an increase in the growth rate of the money supply leads to an increase in the real interest rate, but no change in the nominal interest rate.

According to the Fisher effect, if inflation rises then the nominal interest rate rises.

Your grandfather tells you that his annual income increased at an average rate of eight percent over his lifetime. He complains, however, that the average inflation rate of three percent reduced his ability to buy all the things he could have purchased if inflation had been zero. You respectfully tell your grandfather that he is committing the _____, because his annual income would have increased at an average rate of only five percent if inflation had been zero.

You hear an economist state the following: "The increase in the money supply will causes price to rise in the long run and will have no effect on output or any other real factors." This economist is expressing the principle of _____.

Figure 30-2 In the graph, MS represents the money supply and MD represents money demand. The vertical axis is the value of money measured as 1/P and the horizontal axis is the quantity of money. -Refer to Figure 30-2. Suppose the relevant money-demand curve is the one labeled MD₂; also suppose the velocity of money is 2. If the money market is in equilibrium, then the economy's real GDP amounts to

The money demand curve shifts to the left when the Fed buys government bonds.

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

In the U.S., taxes are paid on one's _____ gains/returns. Therefore, a _____ inflation rate encourages more saving.

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

The nominal interest rate is eight percent and the consumer price index rises from 140 to 147. What is the real interest rate?