Exam 4: Money and Inflation

Suppose you borrow $5000 at an interest rate of 8%.If the expected real interest rate is 3%,then the rate of inflation over the upcoming year that would be most beneficial to you would be

The growth rate of real GDP in Astoria is 7.5%.Assume the growth rate of velocity is 0%.If Astoria wishes to decrease the inflation rate from the annual rate of 5.99% to a target rate of 4.5% and maintain its current growth rate of real GDP,by how many percentage points will the growth rate of the money supply need to change?

Suppose that in 2013,all prices in the economy increased by 50% and that all wages and salaries also increased by 50%.Which of the following is true?

Which of the following is one of the most important benefits of money in an economy?

Suppose you purchase a bottle of vitamin water with a price of $3.The price of $3 best reflects the function of money as a ________,and when you take $3 out of your wallet to purchase the bottle,money is functioning as a ________.

Changes in the money supply are ________ to other economic variables,and since late 1981,the Bank of Canada has ________ in monetary policymaking.

Money's most narrow definition is based on its function as a

An intrinsically useful good that plays the role of money is called

Fiat money has

If a government chooses to finance a budget deficit by borrowing and the expected inflation rate does not change,this will cause the real interest rate to ________ and the nominal interest rate to ________.

Suppose the annual growth rate of real GDP for the nation of Svengali is 5% and the growth rate of velocity is 0%.If the money supply growth rate decreases from 4% to 2%,what is the new rate of inflation in Svengali?

Reserves are a bank ________ consisting of ________.

The M1+ measure of the money supply equals

During the 1990s,Japan experienced periods of deflation and nominal interest rates that approached zero percent.Why would anyone lending money agree to a nominal interest rate of almost zero percent?

Suppose the annual growth rate of real GDP for the nation of Vicuna is 8%,the growth rate of velocity is 0%,and the growth rate of the money supply is 12%. a. What is the current rate of inflation? b. What will happen to the inflation rate if the growth of the money supply increases to 16%? c. What will happen to the inflation rate if the growth of the money supply increases to 16%,and,at the same time,the growth rate of velocity increases to 4%?

$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Table 4.2 Income range Twx percentage 0-\ 15500 8\% 15500-\ 42500 14\% 42500-\ 76500 27\% Above \ 76500 39\% Tax brackets for a single person, 2013 -Refer to Figure 2.4..Assume Darryl earned $47 500 in 2013. a. How much would Darryl pay in taxes? b. Suppose that inflation in 2013 was 7%,and Darryl received a 3% raise in 2013.What happens to Darryl's nominal income,and what happens to his real income? c. What happens to Darryl's tax payment once he receives the raise? Has his real tax payment increased,decreased,or stayed the same?

Which of the following statements regarding the use of gold as money is false?

By the time the German hyperinflation following World War I ended in November 1923,the price level in Germany was ________ times higher than at the beginning of the hyperinflation.

If there is no change in the quantity of currency,the purchase of $100 million of government bonds by the Bank of Canada will cause reserves at banks to

If the money supply grows at 5% and real GDP grows at 6%,the quantity theory predicts the inflation rate will be