Question 1

Broad money is represented by

Accepted Answer

A) H. 
B) M1. 
C) M2. 
D) higher powered money. 
E)  the monetary base. 
A) H. 
B) M1. 
C) M2. 
D) higher powered money. 
E)  the monetary base.

Question 2

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u = un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 3

Which of the following is an example of the "shoe-leather costs" of inflation?

Accepted Answer

A) a rise in the cost of primary raw materials, like leather for shoes 
B) an artificial rise in the capital gains tax 
C) the need to take more trips to the bank 
D) miscalculations due to money illusion 
E)  All of the above 
A) a rise in the cost of primary raw materials, like leather for shoes 
B) an artificial rise in the capital gains tax 
C) the need to take more trips to the bank 
D) miscalculations due to money illusion 
E)  All of the above

Question 4

What are some of the questions about the macro prudential tools?

Accepted Answer

1)In many cases we do not know how well

Question 5

Monetary policy has medium-run effects on which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) the nominal interest rate 
D) the real interest rate 
E)  none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) the nominal interest rate 
D) the real interest rate 
E)  none of the above

Question 6

Explain the costs imposed by an increase in inflation.

Accepted Answer

The answers to this question s

Question 7

In the medium run,an increase in inflation causes

Accepted Answer

A) an increase in the opportunity cost of holding money. 
B) a reduction in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding bonds to money and increase their real money balances. 
A) an increase in the opportunity cost of holding money. 
B) a reduction in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding bonds to money and increase their real money balances.

Question 8

The Taylor rule (where a and b are positive parameters)is represented by

Accepted Answer

A) i = i* + a(π* - π)- b(un - u). 
B) i = i* + a(π - π *)+ b(u - un). 
C) i = i* + a(π* - π)- b(u - un). 
D) none of the above 
A) i = i* + a(π* - π)- b(un - u). 
B) i = i* + a(π - π *)+ b(u - un). 
C) i = i* + a(π* - π)- b(u - un). 
D) none of the above

Question 9

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u < un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 10

Discuss the change of the design of monetary policy over time.

Accepted Answer

Traditionally,the design of monetary pol

Question 11

Monetary policy has short-run effects on which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) only the nominal interest rate, not the real interest rate 
E)  none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) only the nominal interest rate, not the real interest rate 
E)  none of the above

Question 12

In the United States,day-to-day decisions about monetary policy are carried out by

Accepted Answer

A) the Board of Governors. 
B) the Chairman of the Board of Governors. 
C) the Federal Open Market Committee. 
D) the Open Market desk in New York. 
E)  none of the above 
A) the Board of Governors. 
B) the Chairman of the Board of Governors. 
C) the Federal Open Market Committee. 
D) the Open Market desk in New York. 
E)  none of the above

Question 13

Which of the following has the tightest relation with inflation?

Accepted Answer

A) H, the monetary base 
B) M1 
C) M2 
D) M3 
A) H, the monetary base 
B) M1 
C) M2 
D) M3

Question 14

Discuss and explain each of the instruments of monetary policy.

Accepted Answer

The instruments are:

Question 15

Which of the following would serve to reduce the costs caused by the variability of inflation?

Accepted Answer

A) seignorage 
B) bracket creep 
C) a higher capital gains tax 
D) indexed wages 
E)  none of the above 
A) seignorage 
B) bracket creep 
C) a higher capital gains tax 
D) indexed wages 
E)  none of the above

Question 16

The Humphrey-Hawkins Act requires the Fed to promote

Accepted Answer

A) stable prices. 
B) maximum employment. 
C) moderate long-term interest rates. 
D) all of the above 
E)  none of the above 
A) stable prices. 
B) maximum employment. 
C) moderate long-term interest rates. 
D) all of the above 
E)  none of the above

Question 17

Which of the following is a function of money?

Accepted Answer

A) medium of exchange 
B) provides protection from inflation 
C) it is a flow variable 
D) all of the above 
E)  none of the above 
A) medium of exchange 
B) provides protection from inflation 
C) it is a flow variable 
D) all of the above 
E)  none of the above

Question 18

In the medium run,an increase in the rate of growth of nominal money will cause

Accepted Answer

A) lower nominal and lower real interest rates. 
B) lower nominal interest rates and no change in the real interest rate. 
C) an increase in inflation and an increase in output growth. 
D) a proportionate increase in inflation. 
A) lower nominal and lower real interest rates. 
B) lower nominal interest rates and no change in the real interest rate. 
C) an increase in inflation and an increase in output growth. 
D) a proportionate increase in inflation.

Question 19

In the medium run,a reduction in inflation causes

Accepted Answer

A) a reduction in the opportunity cost of holding money. 
B) an increase in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding money to bonds and reduce their real money balances. 
A) a reduction in the opportunity cost of holding money. 
B) an increase in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding money to bonds and reduce their real money balances.

Question 20

A change in the reserve requirement changes

Accepted Answer

A) the monetary base. 
B) the money multiplier. 
C) the discount rate. 
D) all of the above 
E)  none of the above 
A) the monetary base. 
B) the money multiplier. 
C) the discount rate. 
D) all of the above 
E)  none of the above

Exam 23: Monetary Policy: a Summing up

Broad money is represented by

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u = un.Given this information,we would expect that the Fed will

Which of the following is an example of the "shoe-leather costs" of inflation?

What are some of the questions about the macro prudential tools?

Monetary policy has medium-run effects on which of the following?

Explain the costs imposed by an increase in inflation.

In the medium run,an increase in inflation causes

The Taylor rule (where a and b are positive parameters)is represented by

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π > π?* and u < un.Given this information,we would expect that the Fed will

Discuss the change of the design of monetary policy over time.

Monetary policy has short-run effects on which of the following?

In the United States,day-to-day decisions about monetary policy are carried out by

Which of the following has the tightest relation with inflation?

Discuss and explain each of the instruments of monetary policy.

Which of the following would serve to reduce the costs caused by the variability of inflation?

The Humphrey-Hawkins Act requires the Fed to promote

Which of the following is a function of money?

In the medium run,an increase in the rate of growth of nominal money will cause

In the medium run,a reduction in inflation causes

A change in the reserve requirement changes

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

Financial Markets Ii: the Extended Is-Lm Model

The Labor Market

The Phillips Curve, the Natural Rate of Unemployment, and Inflation

From the Short to the Medium Run: the Is-Lm-Pc Model

The Facts of Growth

Saving, capital Accumulation, and Output

Technological Progress and Growth

Technological Progress: the Short, the Medium, and the Long Run

Financial Markets and Expectations

Expectations, consumption, and Investment

Expectations, output, and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output, the Interest Rate, and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Fiscal Policy: a Summing up

Epilogue: the Story of Macroeconomics

Appendix

Filters