Question 1

When calculating how much changes in the money supply will change nominal GDP, we use the money multiplier instead of the spending multiplier.

Accepted Answer

A) True 
 B)False

Question 2

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

Accepted Answer

A)  selling US Treasury securities in the open market. 
B)  lowering the discount rate. 
C)  by lowering the reserve requirement. 
D)  buying US Treasury securities in the open market. 
E)  printing money. 
A)  selling US Treasury securities in the open market. 
B)  lowering the discount rate. 
C)  by lowering the reserve requirement. 
D)  buying US Treasury securities in the open market. 
E)  printing money.

Question 3

In the long run, an expansionary monetary policy will lead to:

Accepted Answer

A)  a decrease in aggregate expenditure. 
B)  an increase in unemployment. 
C)  an increase in the price level. 
D)  an increase in potential output. 
E)  a decrease in the price level. 
A)  a decrease in aggregate expenditure. 
B)  an increase in unemployment. 
C)  an increase in the price level. 
D)  an increase in potential output. 
E)  a decrease in the price level.

Question 4

Other things constant, if the interest rate rises, people prefer to hold:

Accepted Answer

A)  less money because the opportunity cost of holding money has increased. 
B)  more money because the opportunity cost of holding money has increased. 
C)  less money because the opportunity cost of holding money has declined. 
D)  more money because the opportunity cost of holding money has declined. 
E)  the same amount of money because the opportunity cost of holding money is zero. 
A)  less money because the opportunity cost of holding money has increased. 
B)  more money because the opportunity cost of holding money has increased. 
C)  less money because the opportunity cost of holding money has declined. 
D)  more money because the opportunity cost of holding money has declined. 
E)  the same amount of money because the opportunity cost of holding money is zero.

Question 5

When the Fed adopts an expansionary monetary policy:

Accepted Answer

A)  the demand for investment curve shifts to the left. 
B)  the demand for investment curve shifts to the right. 
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)  there is no impact on the demand for investment curve. 
A)  the demand for investment curve shifts to the left. 
B)  the demand for investment curve shifts to the right. 
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)  there is no impact on the demand for investment curve.

Question 6

During the 2007-2009 financial crisis, the Federal Reserve took some unusual steps in its conduct of monetary policy. Which of the following was not one of them?

Accepted Answer

A)  It invested in AIG. 
B)  It invested more than $1 trillion in mortgage-backed securities. 
C)  It worked with the U.S. Treasury and with other regulators to stabilize banks and thaw frozen credit lines. 
D)  It worked with the U.S. Treasury and other regulators to help conduct a stress test of the 19 largest banks. 
E)  It bailed out General Motors. 
A)  It invested in AIG. 
B)  It invested more than $1 trillion in mortgage-backed securities. 
C)  It worked with the U.S. Treasury and with other regulators to stabilize banks and thaw frozen credit lines. 
D)  It worked with the U.S. Treasury and other regulators to help conduct a stress test of the 19 largest banks. 
E)  It bailed out General Motors.

Question 7

If the Fed targets the interest rate, then:

Accepted Answer

A)  the money supply will grow at a more controlled rate. 
B)  monetary policy will reinforce fluctuations in economic activity. 
C)  the price level will be more stable in the long run. 
D)  money demand will be more stable. 
E)  velocity will be less stable. 
A)  the money supply will grow at a more controlled rate. 
B)  monetary policy will reinforce fluctuations in economic activity. 
C)  the price level will be more stable in the long run. 
D)  money demand will be more stable. 
E)  velocity will be less stable.

Question 8

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 9

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 10

Which of these is most likely to lower the velocity of money?

Accepted Answer

A)  A commercial innovation that facilitates exchange 
B)  A low inflation rate 
C)  A decline in the effectiveness of money as a store of wealth 
D)  A high inflation rate 
E)  A weekly pay for workers instead of a monthly pay 
A)  A commercial innovation that facilitates exchange 
B)  A low inflation rate 
C)  A decline in the effectiveness of money as a store of wealth 
D)  A high inflation rate 
E)  A weekly pay for workers instead of a monthly pay

When calculating how much changes in the money supply will change nominal GDP, we use the money multiplier instead of the spending multiplier.

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

In the long run, an expansionary monetary policy will lead to:

Other things constant, if the interest rate rises, people prefer to hold:

When the Fed adopts an expansionary monetary policy:

During the 2007-2009 financial crisis, the Federal Reserve took some unusual steps in its conduct of monetary policy. Which of the following was not one of them?

If the Fed targets the interest rate, then:

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

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

Which of these is most likely to lower the velocity of money?

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

Exam 15: Monetary Theory and Policy

When calculating how much changes in the money supply will change nominal GDP, we use the money multiplier instead of the spending multiplier.

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy. The Fed can return the economy depicted by this figure to its potential output in the long run by:

In the long run, an expansionary monetary policy will lead to:

Other things constant, if the interest rate rises, people prefer to hold:

When the Fed adopts an expansionary monetary policy:

During the 2007-2009 financial crisis, the Federal Reserve took some unusual steps in its conduct of monetary policy. Which of the following was not one of them?

If the Fed targets the interest rate, then:

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

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

Which of these is most likely to lower the velocity of money?

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