Question 1

Which of the following anti-inflation policies would use tax penalties and tax reductions to control wage increases?

Accepted Answer

A)  tax-based incomes policy 
B)  wage and price guideposts 
C)  wage and price controls 
D)  indexation 
A)  tax-based incomes policy 
B)  wage and price guideposts 
C)  wage and price controls 
D)  indexation

Question 2

Inflation is the increase in the general level of prices.

Accepted Answer

A) True 
 B)False

Question 3

An easy money policy calls for:

Accepted Answer

A)  selling securities in the open market and raising the discount rate 
B)  raising the reserve requirement 
C)  Federal Reserve Bank presidents handing out money in the streets 
D)  buying securities in the open market and lowering the discount rate 
A)  selling securities in the open market and raising the discount rate 
B)  raising the reserve requirement 
C)  Federal Reserve Bank presidents handing out money in the streets 
D)  buying securities in the open market and lowering the discount rate

Question 4

The Federal Reserve System is responsible for managing the nation's fiscal policy.

Accepted Answer

A) True 
 B)False

Question 5

A monetary rule calls for establishing an unchanging rate of growth in the money supply on an annual basis.

Accepted Answer

A) True 
 B)False

Question 6

Nominal income refers to the physical amounts of goods and services that can be purchased with a given dollar amount of income.

Accepted Answer

A) True 
 B)False

Question 7

An easy money policy is the appropriate policy for fighting inflation.

Accepted Answer

A) True 
 B)False

Question 8

Supply-side economic policies used tax reductions in an attempt to:

Accepted Answer

A)  stimulate aggregate supply, expand output, and lower inflation 
B)  stimulate aggregate demand to expand output, but tolerate higher price levels 
C)  stimulate both aggregate demand and aggregate supply to increase output, but with no specific goal for inflation 
D)  prove once and for all that Keynes is dead 
A)  stimulate aggregate supply, expand output, and lower inflation 
B)  stimulate aggregate demand to expand output, but tolerate higher price levels 
C)  stimulate both aggregate demand and aggregate supply to increase output, but with no specific goal for inflation 
D)  prove once and for all that Keynes is dead

Question 9

Which of the following statements is true?

Accepted Answer

A)  inflation makes nominal interest rates rise 
B)  unanticipated inflation redistributes wealth from debtors to creditors 
C)  inflation increases the purchasing power of households on fixed incomes 
D)  the simple money multiplier is the inverse of the discount rate 
A)  inflation makes nominal interest rates rise 
B)  unanticipated inflation redistributes wealth from debtors to creditors 
C)  inflation increases the purchasing power of households on fixed incomes 
D)  the simple money multiplier is the inverse of the discount rate

Question 10

Inflation tends to redistribute income from creditors to debtors.

Accepted Answer

A) True 
 B)False

Question 11

The discount rate is a tool of monetary policy that involves the sales and purchases of securities in the open market.

Accepted Answer

A) True 
 B)False

Question 12

Cost-push inflation originates from the supply side of the market.

Accepted Answer

A) True 
 B)False

Question 13

Management of the money supply is the role of the U.S. Treasury.

Accepted Answer

A) True 
 B)False

Question 14

Inflation tends to increase the purchasing power one's money income.

Accepted Answer

A) True 
 B)False

Question 15

The fact that the velocity of money has not been completely stable has:

Accepted Answer

A)  made monetary policy more reliable 
B)  caused a switch to fiscal policy 
C)  stopped the bank-creation of money 
D)  made the task of formulating monetary policy more difficult 
A)  made monetary policy more reliable 
B)  caused a switch to fiscal policy 
C)  stopped the bank-creation of money 
D)  made the task of formulating monetary policy more difficult

Question 16

The consumer price index was 113.6 in 1987 and 118.3 in 1988. The inflation rate
From 1987 to 1988 was:

Accepted Answer

A)  4.7 percent 
B)  4.1 percent 
C)  18.3 percent 
D)  impossible to determine with the data given 
A)  4.7 percent 
B)  4.1 percent 
C)  18.3 percent 
D)  impossible to determine with the data given

Question 17

The Federal Reserve's monetary policy during the period of the "Great Recession" from 2007-2009 can be categorized as:

Accepted Answer

A)  a neutral monetary policy of "allowing the chips to fall where they may" 
B)  an easy-money policy oriented toward fighting recession and stimulating growth 
C)  a tight-money policy designed to fight recession and stimulate growth 
D)  a supply-side tax cut 
E)  monetary policy panic 
A)  a neutral monetary policy of "allowing the chips to fall where they may" 
B)  an easy-money policy oriented toward fighting recession and stimulating growth 
C)  a tight-money policy designed to fight recession and stimulate growth 
D)  a supply-side tax cut 
E)  monetary policy panic

Question 18

The recession of 2007-2009:

Accepted Answer

A)  was rather run-of-the-mill 
B)  prompted the Federal Reserve to increase the number of its tools of monetary policy in order to ensure sufficient liquidity to a various segments of financial markets 
C)  kept the Federal Reserve on a tight money course 
D)  was fully countered by the Federal Reserve's monetary policy 
A)  was rather run-of-the-mill 
B)  prompted the Federal Reserve to increase the number of its tools of monetary policy in order to ensure sufficient liquidity to a various segments of financial markets 
C)  kept the Federal Reserve on a tight money course 
D)  was fully countered by the Federal Reserve's monetary policy

Question 19

Real values differ from nominal values in that:

Accepted Answer

A)  real values are less important 
B)  real values measure money value while nominal values measure physical amounts of goods and services 
C)  real values are computed with respect to base period prices while nominal values are stated in current prices 
D)  the terminology is different, but they measure the same thing 
A)  real values are less important 
B)  real values measure money value while nominal values measure physical amounts of goods and services 
C)  real values are computed with respect to base period prices while nominal values are stated in current prices 
D)  the terminology is different, but they measure the same thing

Question 20

Demand-pull inflation is best represented by a leftward shift of the aggregate supply curve.

Accepted Answer

A) True 
 B)False

Which of the following anti-inflation policies would use tax penalties and tax reductions to control wage increases?

Inflation is the increase in the general level of prices.

An easy money policy calls for:

The Federal Reserve System is responsible for managing the nation's fiscal policy.

A monetary rule calls for establishing an unchanging rate of growth in the money supply on an annual basis.

Nominal income refers to the physical amounts of goods and services that can be purchased with a given dollar amount of income.

An easy money policy is the appropriate policy for fighting inflation.

Supply-side economic policies used tax reductions in an attempt to:

Which of the following statements is true?

Inflation tends to redistribute income from creditors to debtors.

The discount rate is a tool of monetary policy that involves the sales and purchases of securities in the open market.

Cost-push inflation originates from the supply side of the market.

Management of the money supply is the role of the U.S. Treasury.

Inflation tends to increase the purchasing power one's money income.

The fact that the velocity of money has not been completely stable has:

The consumer price index was 113.6 in 1987 and 118.3 in 1988. The inflation rate From 1987 to 1988 was:

The Federal Reserve's monetary policy during the period of the "Great Recession" from 2007-2009 can be categorized as:

The recession of 2007-2009:

Real values differ from nominal values in that:

Demand-pull inflation is best represented by a leftward shift of the aggregate supply curve.

Toward a Twenty-First Century Economic Agenda: Goals and Possibilities

The Market Economy: Pure and Simple

Government in the Economy: The Limits of Intervention

The Historical Foundation of American Economic Institutions and Ideas

When Firms Act As Pricemakers: Competition Versus Monopoly

The Economics of Externalities and the Environment

Health-Care Issues

Factor Markets: Pricing and Productivity

The Distribution of Income: Dividing the Economic Pie

Government Expenditures and Taxation

Accounting for Economic Fluctuations: Aggregate Demand and Aggregate Supply Analysis

Maintaining a Rising Level of Output: The Importance of Economic Growth

Employment and Unemployment: Who Is Out of Work and Why

The Federal Debt and Deficit Crisis: The Limits of Fiscal Policy

America in the World: International Trade

America in the World: International Finance

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Exam 15: Keeping Inflation Under Control: The Limits of Monetary Policy

Which of the following anti-inflation policies would use tax penalties and tax reductions to control wage increases?

Inflation is the increase in the general level of prices.

An easy money policy calls for:

The Federal Reserve System is responsible for managing the nation's fiscal policy.

A monetary rule calls for establishing an unchanging rate of growth in the money supply on an annual basis.

Nominal income refers to the physical amounts of goods and services that can be purchased with a given dollar amount of income.

An easy money policy is the appropriate policy for fighting inflation.

Supply-side economic policies used tax reductions in an attempt to:

Which of the following statements is true?

Inflation tends to redistribute income from creditors to debtors.

The discount rate is a tool of monetary policy that involves the sales and purchases of securities in the open market.

Cost-push inflation originates from the supply side of the market.

Management of the money supply is the role of the U.S. Treasury.

Inflation tends to increase the purchasing power one's money income.

The fact that the velocity of money has not been completely stable has:

The consumer price index was 113.6 in 1987 and 118.3 in 1988. The inflation rate From 1987 to 1988 was:

The Federal Reserve's monetary policy during the period of the "Great Recession" from 2007-2009 can be categorized as:

The recession of 2007-2009:

Real values differ from nominal values in that:

Demand-pull inflation is best represented by a leftward shift of the aggregate supply curve.

Toward a Twenty-First Century Economic Agenda: Goals and Possibilities

The Market Economy: Pure and Simple

Government in the Economy: The Limits of Intervention

The Historical Foundation of American Economic Institutions and Ideas

When Firms Act As Pricemakers: Competition Versus Monopoly

The Economics of Externalities and the Environment

Health-Care Issues

Factor Markets: Pricing and Productivity

The Distribution of Income: Dividing the Economic Pie

Government Expenditures and Taxation

Accounting for Economic Fluctuations: Aggregate Demand and Aggregate Supply Analysis

Maintaining a Rising Level of Output: The Importance of Economic Growth

Employment and Unemployment: Who Is Out of Work and Why

The Federal Debt and Deficit Crisis: The Limits of Fiscal Policy

America in the World: International Trade

America in the World: International Finance

Filters