Exam 15: Monetary Theory and Policy

If the quantity of money supplied exceeds the quantity of money demanded, at a point in time:

A rising rate of inflation:

The Fed can close a recessionary gap by:

If the money supply in an economy equals $1,000 and nominal GDP equals $3,000, then according to the equation of exchange, velocity of money:

Planned investment expenditures will eventually decrease after:

In the money market, an increase in money supply will:

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 level of real GDP will cause a movement from:

In an economy in which velocity is constant and real output grows at an average rate of 4 percent per year, a 4 percent average rate of growth in the money supply would result in:

For interest rates to remain stable during economic expansions, the money supply should:

Other things constant, the quantity of money demanded varies:

If the value of the spending multiplier is greater than 1, then an increase in investment will shift the aggregate demand curve to the left.

Other things constant, an increase in the real GDP of a country will:

The equilibrium interest rate in a money market is determined by:

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.

Which of these is an advantage of money as a store of value?

A decrease in the money supply in the short run will cause an increase in planned investment spending.

The figure given below shows short run and long run equilibrium in an aggregate demand-aggregate supply model. The economy shown in this figure is:

If the Fed sells U.S. government securities to drain reserves from banks, which of the following is most likely to occur?

The quantity theory of money assumes that money supply and price level are the only variables in the equation of exchange that are free to fluctuate.