Question 1

Which of the following is correct?

Accepted Answer

A)   The Continental Congress used the inflation tax to help finance the American Revolution.
B)   The inflation is today a principal source of revenue for the U.S.government.
C)   There is no way a person can avoid the inflation tax.
D)   None of the above is correct.E) None of the above
F) B) and C)

Question 2

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

Accepted Answer

A)   Inflation is 4 percent;the tax rate is 5 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) None of the above
F) A) and C)

Question 3

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) All of the above
F) C) and D)

Question 4

The irrelevance of monetary changes for real variables is called monetary neutrality.Most economists accept monetary neutrality as a good description of the economy in the long run,but not the short run.

Accepted Answer

A) True 
 B)False

Question 5

If inflation is higher than expected,then borrowers make nominal interest payments that are less than they expected.

Accepted Answer

A) True 
 B)False

Question 6

When the money supply and the price level in countries that experienced hyperinflation are plotted on a graph against time,we see that

Accepted Answer

A)   the price level grew at about the same rate as the money supply.
B)   the price level grew at a much faster rate than the money supply.
C)   the price level grew at a much slower rate than the money supply.
D)   the inflation rate and the money supply growth rate do not appear to be related.E) All of the above
F) A) and C)

Question 7

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

Accepted Answer

A)   either a rise in output or a rise in velocity.
B)   either a rise in output or a fall in velocity.
C)   either a fall in output or a rise in velocity.
D)   either a fall in output or a fall in velocity.E) B) and D)
F) B) and C)

Question 8

Figure 30-1 1 to MS2, A)  the demand for goods and services decreases. B)  the economy's ability to produce goods and services increases. C)  the equilibrium price level increases. D)  the equilibrium value of money increases." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 30-1.When the money supply curve shifts from MS1 to MS2,

Accepted Answer

A)   the demand for goods and services decreases.
B)   the economy's ability to produce goods and services increases.
C)   the equilibrium price level increases.
D)   the equilibrium value of money increases.E) A) and B)
F) B) and C)

Question 9

Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be.The real interest rate she earns is

Accepted Answer

A)   higher than she had expected,and the real value of the loan is higher than she had expected.
B)   higher than she had expected,and the real value of the loan is lower than she had expected.
C)   lower than she had expected,and the real value of the loan is higher than she had expected.
D)   lower then she had expected,and the real value of the loan is lower than she had expected.E) A) and D)
F) A) and C)

Question 10

Explain how inflation affects savings.

Accepted Answer

Inflation discourages savings.Income tax...

Question 11

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Accepted Answer

A)   1/2
B)   2
C)   4
D)   8E) A) and C)
F) None of the above

Question 12

The quantity theory of money implies that if output and velocity are constant,then a 50 percent increase in the money supply would lead to less than a 50 percent increase in the price level.

Accepted Answer

A) True 
 B)False

Exam 30: Money Growth and Inflation

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

Correct Answer
verified

If inflation is higher than expected,then borrowers make nominal interest payments that are less than they expected.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

Correct Answer
verified

The irrelevance of monetary changes for real variables is called monetary neutrality.Most economists accept monetary neutrality as a good description of the economy in the long run,but not the short run.

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

When the money supply and the price level in countries that experienced hyperinflation are plotted on a graph against time,we see that

Correct Answer
verified

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Correct Answer
verified

The quantity theory of money implies that if output and velocity are constant,then a 50 percent increase in the money supply would lead to less than a 50 percent increase in the price level.

Correct Answer
verified

Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be.The real interest rate she earns is

Correct Answer
verified

Explain how inflation affects savings.

Correct Answer
verified
Inflation discourages savings.Income tax...
View Answer

Exam 30: Money Growth and Inflation

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

Correct AnswerverifiedShow Answer

If inflation is higher than expected,then borrowers make nominal interest payments that are less than they expected.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

Correct AnswerverifiedShow Answer

The irrelevance of monetary changes for real variables is called monetary neutrality.Most economists accept monetary neutrality as a good description of the economy in the long run,but not the short run.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

When the money supply and the price level in countries that experienced hyperinflation are plotted on a graph against time,we see that

Correct AnswerverifiedShow Answer

If M = 3,000,P = 2,and Y = 12,000,what is velocity?

Correct AnswerverifiedShow Answer

The quantity theory of money implies that if output and velocity are constant,then a 50 percent increase in the money supply would lead to less than a 50 percent increase in the price level.

Correct AnswerverifiedShow Answer

Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be.The real interest rate she earns is

Correct AnswerverifiedShow Answer

Explain how inflation affects savings.

Correct AnswerverifiedInflation discourages savings.Income tax...View AnswerShow Answer

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

Correct Answer
verified

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Correct Answer
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Correct Answer
verified
Inflation discourages savings.Income tax...
View Answer