Question 1

A decrease in the market interest rate,other things constant,will result in:

Accepted Answer

A) a rightward shift of the money demand curve. 
B) a leftward shift of the money demand curve. 
C) an increase in the slope of the money demand curve. 
D) a movement up along the money demand curve. 
E) a movement down along the money demand curve. 
A) a rightward shift of the money demand curve. 
B) a leftward shift of the money demand curve. 
C) an increase in the slope of the money demand curve. 
D) a movement up along the money demand curve. 
E) a movement down along the money demand curve.

Question 2

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,a decrease in nominal GDP with no change in the price level will cause a movement from:

Accepted Answer

A) point B to point A. 
B) point A to point B. 
C) DM to DM'. 
D) DM to DM*. 
E) point E to point F. 
A) point B to point A. 
B) point A to point B. 
C) DM to DM'. 
D) DM to DM*. 
E) point E to point F.

Question 3

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,an increase in the interest rate will cause a movement from:

Accepted Answer

A) point B to point A. 
B) point A to point B. 
C) DM to DM'. 
D) DM to DM*. 
E) point E to point D. 
A) point B to point A. 
B) point A to point B. 
C) DM to DM'. 
D) DM to DM*. 
E) point E to point D.

Question 4

All other things constant,if the interest rate decreases on account of a monetary policy:

Accepted Answer

A) the demand for investment curve shifts to the right. 
B) the demand for investment curve shifts to the left. 
C) there is a downward movement along the demand for investment curve. 
D) there is an upward movement along the demand for investment curve. 
E) real GDP decreases. 
A) the demand for investment curve shifts to the right. 
B) the demand for investment curve shifts to the left. 
C) there is a downward movement along the demand for investment curve. 
D) there is an upward movement along the demand for investment curve. 
E) real GDP decreases.

Question 5

Given an upward sloping aggregate supply curve,which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply?

Accepted Answer

A) The aggregate demand curve shifts leftward,lowering real GDP and the price level. 
B) The aggregate demand curve shifts leftward,raising real GDP and the price level. 
C) The aggregate demand curve shifts leftward,lowering real GDP but raising the price level. 
D) The aggregate demand curve shifts rightward,raising real GDP and the price level. 
E) The aggregate demand curve shifts rightward,lowering real GDP but raising the price level. 
A) The aggregate demand curve shifts leftward,lowering real GDP and the price level. 
B) The aggregate demand curve shifts leftward,raising real GDP and the price level. 
C) The aggregate demand curve shifts leftward,lowering real GDP but raising the price level. 
D) The aggregate demand curve shifts rightward,raising real GDP and the price level. 
E) The aggregate demand curve shifts rightward,lowering real GDP but raising the price level.

Question 6

Which of these changes is likely to follow when the Fed purchases U.S.government securities?

Accepted Answer

A) Aggregate demand will decrease. 
B) The demand for financial securities will increase. 
C) Rate of interest will increase. 
D) Planned investment spending will increase. 
E) Real GDP will decrease. 
A) Aggregate demand will decrease. 
B) The demand for financial securities will increase. 
C) Rate of interest will increase. 
D) Planned investment spending will increase. 
E) Real GDP will decrease.

Question 7

When people exchange money for financial assets,the _____ rises.

Accepted Answer

A) real GDP 
B) price level 
C) unemployment rate 
D) nominal GDP 
E) interest rate 
A) real GDP 
B) price level 
C) unemployment rate 
D) nominal GDP 
E) interest rate

Question 8

The quantity theory of money states that increases in the money supply result in proportional increases in real GDP.

Accepted Answer

A) True 
 B)False

Question 9

An identity is a relationship expressed in such a way that it is true by definition.

Accepted Answer

A) True 
 B)False

Question 10

According to the equation of exchange,if nominal GDP equals $6 trillion and the money supply equals $1 trillion,the velocity of money:

Accepted Answer

A) must be 6. 
B) must be 1/6. 
C) must be 6 trillion. 
D) must be 1/6 trillion. 
E) cannot be determined unless we know the price level. 
A) must be 6. 
B) must be 1/6. 
C) must be 6 trillion. 
D) must be 1/6 trillion. 
E) cannot be determined unless we know the price level.

Question 11

The figure given below shows equilibrium in a money market.If S is the initial supply curve,the movement from S to S* can be attributed to:

Accepted Answer

A) a decrease in the required reserve ratio. 
B) the purchase of U.S.Treasury securities by the Fed. 
C) the sale of U.S.Treasury securities by the Fed. 
D) a decrease in the discount rate. 
E) a decrease in excess reserves in the banking system. 
A) a decrease in the required reserve ratio. 
B) the purchase of U.S.Treasury securities by the Fed. 
C) the sale of U.S.Treasury securities by the Fed. 
D) a decrease in the discount rate. 
E) a decrease in excess reserves in the banking system.

Question 12

An expansionary monetary policy is always capable of boosting aggregate investment.

Accepted Answer

A) True 
 B)False

Question 13

The demand for money is a relationship between:

Accepted Answer

A) the price level and the amount of cyclical unemployment. 
B) the price level and the actual output produced in an economy. 
C) the interest rate and how much money people choose to hold. 
D) the interest rate and how much money people earn during a certain time period. 
E) the interest rate and the rate of inflation. 
A) the price level and the amount of cyclical unemployment. 
B) the price level and the actual output produced in an economy. 
C) the interest rate and how much money people choose to hold. 
D) the interest rate and how much money people earn during a certain time period. 
E) the interest rate and the rate of inflation.

Question 14

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

Accepted Answer

A) adopt an expansionary monetary policy. 
B) adopt a contractionary monetary policy. 
C) increase the demand for money. 
D) decrease the demand for money. 
E) give up pursuing both goals at the same time. 
A) adopt an expansionary monetary policy. 
B) adopt a contractionary monetary policy. 
C) increase the demand for money. 
D) decrease the demand for money. 
E) give up pursuing both goals at the same time.

Question 15

Which of the following monetary policies would be appropriate to close a recessionary gap?

Accepted Answer

A) A tax cut 
B) A decrease in government purchases 
C) An increase in reserve requirements 
D) The Fed's purchase of U.S.government securities 
E) The Fed's raising the discount rate 
A) A tax cut 
B) A decrease in government purchases 
C) An increase in reserve requirements 
D) The Fed's purchase of U.S.government securities 
E) The Fed's raising the discount rate

Question 16

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n):

Accepted Answer

A) inflation rate of 4 percent,if velocity of money in circulation is constant. 
B) inflation rate of -4 percent,if velocity of money in circulation is constant. 
C) $7 increase in the price level each year. 
D) $7 decrease in the price level each year. 
E) increase in the velocity of money in circulation. 
A) inflation rate of 4 percent,if velocity of money in circulation is constant. 
B) inflation rate of -4 percent,if velocity of money in circulation is constant. 
C) $7 increase in the price level each year. 
D) $7 decrease in the price level each year. 
E) increase in the velocity of money in circulation.

Question 17

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

Accepted Answer

A) True 
 B)False

Question 18

Movements along a money demand curve reflect the effects of changes in the:

Accepted Answer

A) price level on the quantity of money demanded. 
B) interest rate on the demand for money. 
C) real exchange rate on the demand for money. 
D) interest rate on the quantity of money demanded. 
E) potential GDP on the quantity of money demanded. 
A) price level on the quantity of money demanded. 
B) interest rate on the demand for money. 
C) real exchange rate on the demand for money. 
D) interest rate on the quantity of money demanded. 
E) potential GDP on the quantity of money demanded.

Question 19

The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.The Fed can return the economy to potential output in the long run by:

Accepted Answer

A) purchasing U.S.government securities. 
B) decreasing taxes. 
C) selling U.S.government securities. 
D) lowering the discount rate. 
E) lowering the required reserve ratio. 
A) purchasing U.S.government securities. 
B) decreasing taxes. 
C) selling U.S.government securities. 
D) lowering the discount rate. 
E) lowering the required reserve ratio.

Question 20

An increase in the money supply leads to a(n):

Accepted Answer

A) decline in interest rates,an increase in investment,and an increase in aggregate demand. 
B) decline in interest rates,a decrease in investment,and an increase in aggregate demand. 
C) decline in interest rates,an increase in investment,and a decline in aggregate demand. 
D) increase in interest rates,an increase in investment,and an increase in aggregate demand. 
E) decline in interest rates,a decline in investment,and a decline in aggregate demand. 
A) decline in interest rates,an increase in investment,and an increase in aggregate demand. 
B) decline in interest rates,a decrease in investment,and an increase in aggregate demand. 
C) decline in interest rates,an increase in investment,and a decline in aggregate demand. 
D) increase in interest rates,an increase in investment,and an increase in aggregate demand. 
E) decline in interest rates,a decline in investment,and a decline in aggregate demand.

A decrease in the market interest rate,other things constant,will result in:

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,a decrease in nominal GDP with no change in the price level will cause a movement from:

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,an increase in the interest rate will cause a movement from:

All other things constant,if the interest rate decreases on account of a monetary policy:

Given an upward sloping aggregate supply curve,which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply?

Which of these changes is likely to follow when the Fed purchases U.S.government securities?

When people exchange money for financial assets,the _____ rises.

The quantity theory of money states that increases in the money supply result in proportional increases in real GDP.

An identity is a relationship expressed in such a way that it is true by definition.

According to the equation of exchange,if nominal GDP equals $6 trillion and the money supply equals $1 trillion,the velocity of money:

The figure given below shows equilibrium in a money market.If S is the initial supply curve,the movement from S to S* can be attributed to:

An expansionary monetary policy is always capable of boosting aggregate investment.

The demand for money is a relationship between:

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

Which of the following monetary policies would be appropriate to close a recessionary gap?

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n):

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

Movements along a money demand curve reflect the effects of changes in the:

The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.The Fed can return the economy to potential output in the long run by:

An increase in the money supply leads to a(n):

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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Exam 15: Monetary Theory and Policy

A decrease in the market interest rate,other things constant,will result in:

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,a decrease in nominal GDP with no change in the price level will cause a movement from:

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,an increase in the interest rate will cause a movement from:

All other things constant,if the interest rate decreases on account of a monetary policy:

Given an upward sloping aggregate supply curve,which of the following changes in the aggregate demand curve is observed when the Fed reduces the money supply?

Which of these changes is likely to follow when the Fed purchases U.S.government securities?

When people exchange money for financial assets,the _____ rises.

The quantity theory of money states that increases in the money supply result in proportional increases in real GDP.

An identity is a relationship expressed in such a way that it is true by definition.

According to the equation of exchange,if nominal GDP equals $6 trillion and the money supply equals $1 trillion,the velocity of money:

The figure given below shows equilibrium in a money market.If S is the initial supply curve,the movement from S to S* can be attributed to:

An expansionary monetary policy is always capable of boosting aggregate investment.

The demand for money is a relationship between:

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

Which of the following monetary policies would be appropriate to close a recessionary gap?

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n):

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

Movements along a money demand curve reflect the effects of changes in the:

The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.The Fed can return the economy to potential output in the long run by:

An increase in the money supply leads to a(n):

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters