Question 1

Which of the following changes will cause a downward movement along the money demand curve?

Accepted Answer

A)  an increase in the interest rate 
B)  a decrease in the interest rate 
C)  a decrease in real GDP 
D)  an increase in real GDP 
E)  an increase in the price level 
A)  an increase in the interest rate 
B)  a decrease in the interest rate 
C)  a decrease in real GDP 
D)  an increase in real GDP 
E)  an increase in the price level

Question 2

Which of these is a flow variable?

Accepted Answer

A)  wealth 
B)  income 
C)  jewelry 
D)  a bank deposit 
E)  a foreign currency reserve 
A)  wealth 
B)  income 
C)  jewelry 
D)  a bank deposit 
E)  a foreign currency reserve

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

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 5

In 2001, the FOMC became concerned about _____

Accepted Answer

A)  high inflation. 
B)  robust economic growth. 
C)  strong consumer confidence. 
D)  waning consumer confidence. 
E)  strong capital spending. 
A)  high inflation. 
B)  robust economic growth. 
C)  strong consumer confidence. 
D)  waning consumer confidence. 
E)  strong capital spending.

Question 6

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

Accepted Answer

A)  increase the price level. 
B)  shift the demand for money curve rightward. 
C)  shift the demand for money curve leftward. 
D)  decrease the nominal interest rate. 
E)  decrease the quantity of money demanded. 
A)  increase the price level. 
B)  shift the demand for money curve rightward. 
C)  shift the demand for money curve leftward. 
D)  decrease the nominal interest rate. 
E)  decrease the quantity of money demanded.

Question 7

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

Accepted Answer

A)  increase the demand for money at each interest rate. 
B)  decrease the demand for money at each interest rate. 
C)  encourage people to exchange money for interest-bearing assets. 
D)  encourage people to exchange interest-bearing assets for money. 
E)  increase the interest rate. 
A)  increase the demand for money at each interest rate. 
B)  decrease the demand for money at each interest rate. 
C)  encourage people to exchange money for interest-bearing assets. 
D)  encourage people to exchange interest-bearing assets for money. 
E)  increase the interest rate.

Question 8

If money supply is $500 and nominal GDP is $2,000, then the velocity of money _____

Accepted Answer

A)  equals 10. 
B)  equals 4. 
C)  equals 5. 
D)  cannot be determined since we do not know anything about prices. 
E)  cannot be determined since we do not know anything about real GDP. 
A)  equals 10. 
B)  equals 4. 
C)  equals 5. 
D)  cannot be determined since we do not know anything about prices. 
E)  cannot be determined since we do not know anything about real GDP.

Question 9

The demand for money is based primarily on money's role as a(n) _____

Accepted Answer

A)  measure of wealth. 
B)  medium of exchange. 
C)  standard of economic well-being. 
D)  interest-bearing asset. 
E)  non-interest-bearing asset. 
A)  measure of wealth. 
B)  medium of exchange. 
C)  standard of economic well-being. 
D)  interest-bearing asset. 
E)  non-interest-bearing asset.

Question 10

If the velocity of money is 10 and nominal GDP is $1,000, then money supply is _____

Accepted Answer

A)  $1. 
B)  $10. 
C)  $100. 
D)  $500. 
E)  $1,000. 
A)  $1. 
B)  $10. 
C)  $100. 
D)  $500. 
E)  $1,000.

Question 11

The demand for money in an economy is high when the _____

Accepted Answer

A)  real GDP is low. 
B)  personal tax rate is low. 
C)  unemployment rate is high. 
D)  price level is high. 
E)  interest rate is high. 
A)  real GDP is low. 
B)  personal tax rate is low. 
C)  unemployment rate is high. 
D)  price level is high. 
E)  interest rate is high.

Question 12

The velocity of money can be expressed as _____

Accepted Answer

A)  V = P/M 
B)  V = Y/M 
C)  V = (P x Y)/M 
D)  V= (P x M)/Y 
E)  V = (M x Y)/P 
A)  V = P/M 
B)  V = Y/M 
C)  V = (P x Y)/M 
D)  V= (P x M)/Y 
E)  V = (M x Y)/P

Question 13

By how much did bank reserves at the Fed increase between 2007 and 2015?

Accepted Answer

A)  10 times 
B)  50 times 
C)  100 times 
D)  150 times 
E)  200 times 
A)  10 times 
B)  50 times 
C)  100 times 
D)  150 times 
E)  200 times

Question 14

Before 2008, money market mutual funds and hedge funds had been out of the Fed's scope and control because they did not rely on customer deposits.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  the price level in the economy will fall. 
B)  the equilibrium interest rate will increase. 
C)  the equilibrium interest rate will fall. 
D)  the money demand curve will shift to the right. 
E)  the money demand curve will shift to the left. 
A)  the price level in the economy will fall. 
B)  the equilibrium interest rate will increase. 
C)  the equilibrium interest rate will fall. 
D)  the money demand curve will shift to the right. 
E)  the money demand curve will shift to the left.

Question 16

For monetary policy to be effective in changing planned investment spending, _____

Accepted Answer

A)  interest rates must not be responsive to changes in the money supply. 
B)  interest rates must be sensitive to changes in gross domestic product. 
C)  investment must be sensitive to changes in interest rates. 
D)  investment must be sensitive to changes in the price level. 
E)  interest rates must be sensitive to changes in the price level. 
A)  interest rates must not be responsive to changes in the money supply. 
B)  interest rates must be sensitive to changes in gross domestic product. 
C)  investment must be sensitive to changes in interest rates. 
D)  investment must be sensitive to changes in the price level. 
E)  interest rates must be sensitive to changes in the price level.

Question 17

The demand for money is a downward-sloping line that depicts the relationship between the price level and the opportunity cost of holding money.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

Accepted Answer

A)  The demand for money increases. 
B)  Planned investment spending increases. 
C)  The interest rate increases. 
D)  Aggregate expenditure increases. 
E)  The demand for money decreases. 
A)  The demand for money increases. 
B)  Planned investment spending increases. 
C)  The interest rate increases. 
D)  Aggregate expenditure increases. 
E)  The demand for money decreases.

Question 19

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 purchasing U.S. government securities 
E)  the Fed raising the discount rate 
A)  a tax cut 
B)  a decrease in government purchases 
C)  an increase in reserve requirements 
D)  the Fed purchasing U.S. government securities 
E)  the Fed raising the discount rate

Question 20

Since the Federal Reserve was established in 1913, the United States has experienced three periods of high inflation, and each was preceded and accompanied by a period of sharp decline in the money supply.

Accepted Answer

A) True 
 B)False

Which of the following changes will cause a downward movement along the money demand curve?

Which of these is a flow variable?

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.

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

In 2001, the FOMC became concerned about _____

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

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

If money supply is $500 and nominal GDP is $2,000, then the velocity of money _____

The demand for money is based primarily on money's role as a(n) _____

If the velocity of money is 10 and nominal GDP is $1,000, then money supply is _____

The demand for money in an economy is high when the _____

The velocity of money can be expressed as _____

By how much did bank reserves at the Fed increase between 2007 and 2015?

Before 2008, money market mutual funds and hedge funds had been out of the Fed's scope and control because they did not rely on customer deposits.

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

For monetary policy to be effective in changing planned investment spending, _____

The demand for money is a downward-sloping line that depicts the relationship between the price level and the opportunity cost of holding money.

Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

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

Since the Federal Reserve was established in 1913, the United States has experienced three periods of high inflation, and each was preceded and accompanied by a period of sharp decline in the money supply.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 15: Monetary Theory and Policy.

Which of the following changes will cause a downward movement along the money demand curve?

Which of these is a flow variable?

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.

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

In 2001, the FOMC became concerned about _____

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

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

If money supply is $500 and nominal GDP is $2,000, then the velocity of money _____

The demand for money is based primarily on money's role as a(n) _____

If the velocity of money is 10 and nominal GDP is $1,000, then money supply is _____

The demand for money in an economy is high when the _____

The velocity of money can be expressed as _____

By how much did bank reserves at the Fed increase between 2007 and 2015?

Before 2008, money market mutual funds and hedge funds had been out of the Fed's scope and control because they did not rely on customer deposits.

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

For monetary policy to be effective in changing planned investment spending, _____

The demand for money is a downward-sloping line that depicts the relationship between the price level and the opportunity cost of holding money.

Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

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

Since the Federal Reserve was established in 1913, the United States has experienced three periods of high inflation, and each was preceded and accompanied by a period of sharp decline in the money supply.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters