Question 1

Lags are the amount of time between an economic change and the impact of a policy response.

Accepted Answer

A) True 
 B)False

Question 2

Prices that rise continually are always associated with

Accepted Answer

A)  increases in government spending. 
B)  decreases in government spending. 
C)  increases in the money supply. 
D)  decreases in the money supply. 
A)  increases in government spending. 
B)  decreases in government spending. 
C)  increases in the money supply. 
D)  decreases in the money supply.

Question 3

Which of the following are reasons a monetary policymaker might cause inflation due to excessive money supply growth?

Accepted Answer

A)  high employment policies 
B)  overestimating the level of full employment 
C)  high government debt 
D)  all of the above 
A)  high employment policies 
B)  overestimating the level of full employment 
C)  high government debt 
D)  all of the above

Question 4

A tight labor market leads to cost-push inflation.

Accepted Answer

A) True 
 B)False

Question 5

If the monetary policymaker keeps trying to keep output above the natural rate

Accepted Answer

A)  inflation will remain high. 
B)  wages will continue to rise. 
C)  output will return to the natural rate. 
D)  all of the above. 
A)  inflation will remain high. 
B)  wages will continue to rise. 
C)  output will return to the natural rate. 
D)  all of the above.

Question 6

Deflation would cause currency appreciation, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 7

Increased commodity prices lead to demand-pull inflation.

Accepted Answer

A) True 
 B)False

Question 8

Demand-pull inflation can set off accommodative monetary policy and inflation.

Accepted Answer

A) True 
 B)False

Question 9

Lags force central bankers to conduct policy based on forecasts.

Accepted Answer

A) True 
 B)False

Question 10

What are the three ways governments can pay for expenditures?

Accepted Answer

raise taxe

Question 11

No part of North America has ever experienced a hyperinflation.

Accepted Answer

A) True 
 B)False

Question 12

An increase in the money supply leads to a shift in AD in the _____ run and AS in the _____ run.

Accepted Answer

A)  short, short 
B)  short, long 
C)  long, short 
D)  long, long 
A)  short, short 
B)  short, long 
C)  long, short 
D)  long, long

Question 13

Demands by workers for higher wages are more likely when monetary policy is focused on keeping inflation low.

Accepted Answer

A) True 
 B)False

Question 14

What cause is common to all hyperinflations?

Accepted Answer

The answer of What cause is common to all hyperinflations?...

Question 15

Attempts by monetary policymakers to keep unemployment very low could lead to high inflation.

Accepted Answer

A) True 
 B)False

Question 16

A tax cut leads to demand-pull inflation.

Accepted Answer

A) True 
 B)False

Question 17

When output is above the natural rate, the labor market is _____ and wages should

Accepted Answer

A)  tight, rise. 
B)  tight, fall. 
C)  loose, rise. 
D)  loose, fall. 
A)  tight, rise. 
B)  tight, fall. 
C)  loose, rise. 
D)  loose, fall.

Question 18

The type of lag that can be more serious for monetary policy than fiscal policy is

Accepted Answer

A)  data lag. 
B)  recognition lag. 
C)  legislative lag. 
D)  effectiveness lag. 
A)  data lag. 
B)  recognition lag. 
C)  legislative lag. 
D)  effectiveness lag.

Question 19

In a wage-price spiral, when higher wage demands and accommodative monetary policy follow each other, the wage increase is represented by a shift in _____ and the change in monetary policy is represented by a shift in

Accepted Answer

A)  AD, AD. 
B)  AD, AS. 
C)  AS, AD. 
D)  AS, AS. 
A)  AD, AD. 
B)  AD, AS. 
C)  AS, AD. 
D)  AS, AS.

Question 20

Government budget deficits are a source of inflation.

Accepted Answer

A) True 
 B)False

Exam 25: Inflation and Money

Lags are the amount of time between an economic change and the impact of a policy response.

Prices that rise continually are always associated with

Which of the following are reasons a monetary policymaker might cause inflation due to excessive money supply growth?

A tight labor market leads to cost-push inflation.

If the monetary policymaker keeps trying to keep output above the natural rate

Deflation would cause currency appreciation, ceteris paribus.

Increased commodity prices lead to demand-pull inflation.

Demand-pull inflation can set off accommodative monetary policy and inflation.

Lags force central bankers to conduct policy based on forecasts.

What are the three ways governments can pay for expenditures?

No part of North America has ever experienced a hyperinflation.

An increase in the money supply leads to a shift in AD in the _____ run and AS in the _____ run.

Demands by workers for higher wages are more likely when monetary policy is focused on keeping inflation low.

What cause is common to all hyperinflations?

Attempts by monetary policymakers to keep unemployment very low could lead to high inflation.

A tax cut leads to demand-pull inflation.

When output is above the natural rate, the labor market is _____ and wages should

The type of lag that can be more serious for monetary policy than fiscal policy is

In a wage-price spiral, when higher wage demands and accommodative monetary policy follow each other, the wage increase is represented by a shift in _____ and the change in monetary policy is represented by a shift in

Government budget deficits are a source of inflation.

The Financial System

Money

Interest Rates

The Economics of Interest-Rate Fluctuations

The Economics of Interest-Rate Spreads and Yield Curves

Rational Expectations, Efficient Markets, and the Valuation of Corporate Equities

Financial Structure, Transaction Costs, and Asymmetric Information

Bank Management

Innovation and Structure in Banking and Finance

The Economics of Financial Regulation

Financial Derivatives

Financial Crises: Causes and Consequences

Central Bank Form and Function

The Money Supply Process and the Money Multipliers

Monetary Policy Tools

Monetary Policy Targets and Goals

Foreign Exchange

International Monetary Regimes

Money Demand

Is-Lm

Is-Lm in Action

Aggregate Supply and Demand and the Growth Diamond

Monetary Policy Transmission Mechanisms

Rational Expectations Redux: Monetary Policy Implications

Filters

An increase in the money supply leads to a shift in AD in the _ run and AS in the _ run.