Question 1

Incomes policy attempts to control inflation by:

Accepted Answer

A)  decreasing aggregate demand. 
B)  increasing aggregate supply. 
C)  controlling the rate of increase in prices, wages, and other forms of income. 
D)  Both a and b 
A)  decreasing aggregate demand. 
B)  increasing aggregate supply. 
C)  controlling the rate of increase in prices, wages, and other forms of income. 
D)  Both a and b

Question 2

In which of the following examples is money functioning as a medium of exchange?

Accepted Answer

A)  Robin compares the price of apples and oranges. 
B)  Kathy saves her money to purchase a personal computer. 
C)  Scott puts money into a personal retirement account. 
D)  Bill purchases a new pair of Nike shoes. 
A)  Robin compares the price of apples and oranges. 
B)  Kathy saves her money to purchase a personal computer. 
C)  Scott puts money into a personal retirement account. 
D)  Bill purchases a new pair of Nike shoes.

Question 3

M1 includes currency, travelers' checks, demand deposits, other checkable deposits, and small denomination time deposits.

Accepted Answer

A) True 
 B)False

Question 4

The M1 money supply consists of:

Accepted Answer

A)  currency, travelers' checks, demand deposits, and other checkable deposits. 
B)  currency, demand deposits, and small denomination savings accounts. 
C)  currency, demand deposits, other checkable deposits, and U.S. savings bonds. 
D)  currency and demand deposits. 
A)  currency, travelers' checks, demand deposits, and other checkable deposits. 
B)  currency, demand deposits, and small denomination savings accounts. 
C)  currency, demand deposits, other checkable deposits, and U.S. savings bonds. 
D)  currency and demand deposits.

Question 5

Fiscal policy cannot be used to deal with inflation on a long-term basis because:

Accepted Answer

A)  government cannot lower the growth rate in the money supply indefinitely. 
B)  there is a limit as to how much government can cut taxes. 
C)  government may have difficulties on reaching a compromise as to the appropriate policy, a change in taxes or a change in government spending. 
D)  there is a limit as to how much government can decrease spending. 
A)  government cannot lower the growth rate in the money supply indefinitely. 
B)  there is a limit as to how much government can cut taxes. 
C)  government may have difficulties on reaching a compromise as to the appropriate policy, a change in taxes or a change in government spending. 
D)  there is a limit as to how much government can decrease spending.

Question 6

When conducting monetary policy, the Federal Reserve focuses on:

Accepted Answer

A)  changing government spending. 
B)  increasing taxes. 
C)  decreasing taxes. 
D)  changing the money supply. 
A)  changing government spending. 
B)  increasing taxes. 
C)  decreasing taxes. 
D)  changing the money supply.

Question 7

Tei compares the price of a Toyota Celica with the price of a Nissan Stanza. In this example money is functioning as:

Accepted Answer

A)  a medium of exchange. 
B)  a store of value. 
C)  a unit of account. 
D)  a standard of deferred payment. 
A)  a medium of exchange. 
B)  a store of value. 
C)  a unit of account. 
D)  a standard of deferred payment.

Question 8

Evaluate the following statement. "Oil prices are detrimental to the economy, in the form of higher prices resulting in inflation."

Accepted Answer

It is unlikely that oil prices are a cau

Question 9

According to the quantity theory of money, inflation results whenever the growth rate of the money supply exceeds the growth rate of nominal GDP.

Accepted Answer

A) True 
 B)False

Question 10

The broadest price index is:

Accepted Answer

A)  the CPI. 
B)  the producer price index for finished goods. 
C)  the GDP deflator. 
D)  the economy-wide deflator. 
A)  the CPI. 
B)  the producer price index for finished goods. 
C)  the GDP deflator. 
D)  the economy-wide deflator.

Question 11

Use the following diagram to answer the following questions.
  
-Refer to Diagram 14-1. Suppose the economy moves from equilibrium at point A to equilibrium at point B. In this instance, the monetary authorities are most likely:

Accepted Answer

A)  allowing the money supply to grow at a faster rate than real GDP. 
B)  allowing the money supply to grow at a slower rate than real GDP. 
C)  allowing the money supply to grow at a rate equal to real GDP. 
D)  pursuing restrictive monetary policy. 
A)  allowing the money supply to grow at a faster rate than real GDP. 
B)  allowing the money supply to grow at a slower rate than real GDP. 
C)  allowing the money supply to grow at a rate equal to real GDP. 
D)  pursuing restrictive monetary policy.

Question 12

Suppose the rate of growth in the money supply is 4.7 percent. What is the growth rate in nominal GDP?

Accepted Answer

The growth rate in n

Question 13

Given the information in the following table, find M1.

Accepted Answer

M1 is defined as currency, tra

Question 14

According to the quantity theory of money, the main determinant of nominal GDP is:

Accepted Answer

A)  the money supply. 
B)  the growth rate of the capital stock. 
C)  the interest rate. 
D)  the level of consumption. 
A)  the money supply. 
B)  the growth rate of the capital stock. 
C)  the interest rate. 
D)  the level of consumption.

Question 15

The GDP deflator is:

Accepted Answer

A)  a weighted average of the prices of goods and services purchased by a typical urban household. 
B)  a weighted average of the prices of goods and services purchased by a typical manufacturer. 
C)  a weighted average of the prices of all final goods and services produced in the economy. 
D)  a weighted average of the prices of all intermediate goods and services produced in the economy. 
A)  a weighted average of the prices of goods and services purchased by a typical urban household. 
B)  a weighted average of the prices of goods and services purchased by a typical manufacturer. 
C)  a weighted average of the prices of all final goods and services produced in the economy. 
D)  a weighted average of the prices of all intermediate goods and services produced in the economy.

Question 16

The effects of inflation will be more pronounced if it is unanticipated.

Accepted Answer

A) True 
 B)False

Question 17

Abraham buys lunch at work everyday. In this example money is functioning as a:

Accepted Answer

A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  standard of deferred payment. 
A)  medium of exchange. 
B)  store of value. 
C)  unit of account. 
D)  standard of deferred payment.

Question 18

According to the equation of exchange, M * V = P * GDP.

Accepted Answer

A) True 
 B)False

Question 19

Suppose all industries in the Centralized States are monopolized. It is likely that:

Accepted Answer

A)  this country will experience higher rates of inflation than a country whose industries are competitive. 
B)  this country will experience lower rates of inflation than a country whose industries are competitive. 
C)  this country will have higher prices for its goods and services than a country whose industries are competitive. 
D)  this country will have lower prices for its goods and services than a country whose industries are competitive. 
A)  this country will experience higher rates of inflation than a country whose industries are competitive. 
B)  this country will experience lower rates of inflation than a country whose industries are competitive. 
C)  this country will have higher prices for its goods and services than a country whose industries are competitive. 
D)  this country will have lower prices for its goods and services than a country whose industries are competitive.

Question 20

Suppose the GDP deflator in 1997 was 140.0 and the GDP deflator in 1998 was 146.72 What was the rate of change in the GDP deflator?

Accepted Answer

Rate of Ch

Incomes policy attempts to control inflation by:

In which of the following examples is money functioning as a medium of exchange?

M1 includes currency, travelers' checks, demand deposits, other checkable deposits, and small denomination time deposits.

The M1 money supply consists of:

Fiscal policy cannot be used to deal with inflation on a long-term basis because:

When conducting monetary policy, the Federal Reserve focuses on:

Tei compares the price of a Toyota Celica with the price of a Nissan Stanza. In this example money is functioning as:

Evaluate the following statement. "Oil prices are detrimental to the economy, in the form of higher prices resulting in inflation."

According to the quantity theory of money, inflation results whenever the growth rate of the money supply exceeds the growth rate of nominal GDP.

The broadest price index is:

Use the following diagram to answer the following questions. -Refer to Diagram 14-1. Suppose the economy moves from equilibrium at point A to equilibrium at point B. In this instance, the monetary authorities are most likely:

Suppose the rate of growth in the money supply is 4.7 percent. What is the growth rate in nominal GDP?

Given the information in the following table, find M1.

According to the quantity theory of money, the main determinant of nominal GDP is:

The GDP deflator is:

The effects of inflation will be more pronounced if it is unanticipated.

Abraham buys lunch at work everyday. In this example money is functioning as a:

According to the equation of exchange, M * V = P * GDP.

Suppose all industries in the Centralized States are monopolized. It is likely that:

Suppose the GDP deflator in 1997 was 140.0 and the GDP deflator in 1998 was 146.72 What was the rate of change in the GDP deflator?

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Tracking and Explaining the Macroeconomy

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Sustained Budget Deficits: Is This Any Way to Run a Government

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

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Exam 14: Inflation: a Monetary Phenomenon

Incomes policy attempts to control inflation by:

In which of the following examples is money functioning as a medium of exchange?

M1 includes currency, travelers' checks, demand deposits, other checkable deposits, and small denomination time deposits.

The M1 money supply consists of:

Fiscal policy cannot be used to deal with inflation on a long-term basis because:

When conducting monetary policy, the Federal Reserve focuses on:

Tei compares the price of a Toyota Celica with the price of a Nissan Stanza. In this example money is functioning as:

Evaluate the following statement. "Oil prices are detrimental to the economy, in the form of higher prices resulting in inflation."

According to the quantity theory of money, inflation results whenever the growth rate of the money supply exceeds the growth rate of nominal GDP.

The broadest price index is:

Use the following diagram to answer the following questions. -Refer to Diagram 14-1. Suppose the economy moves from equilibrium at point A to equilibrium at point B. In this instance, the monetary authorities are most likely:

Suppose the rate of growth in the money supply is 4.7 percent. What is the growth rate in nominal GDP?

Given the information in the following table, find M1.

According to the quantity theory of money, the main determinant of nominal GDP is:

The GDP deflator is:

The effects of inflation will be more pronounced if it is unanticipated.

Abraham buys lunch at work everyday. In this example money is functioning as a:

According to the equation of exchange, M * V = P * GDP.

Suppose all industries in the Centralized States are monopolized. It is likely that:

Suppose the GDP deflator in 1997 was 140.0 and the GDP deflator in 1998 was 146.72 What was the rate of change in the GDP deflator?

Economic Growth: an Introduction to Scarcity and Choice

An Introduction to Economic Systems and the Workings of the Price System

Competitive Markets and Government Policy: Agriculture

Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Market Power: Does It Help or Hurt the Economy

Air Pollution: Balancing Benefits and Costs

Health Care: How Much for Whom

Crime and Drugs: a Modern Dilemma

College Education: Is It Worth the Cost

Educational Reform: the Role of Incentives and Choice

Poverty: Old and New Approaches to a Persistent Problem

Tracking and Explaining the Macroeconomy

Unemployment: the Legacy of Recession, Technological Change, and Free Choice

Sustained Budget Deficits: Is This Any Way to Run a Government

Social Security: Leading Issues and Approaches to Reform

International Trade: Beneficial, but Controversial

Financing Trade and the Trade Deficit

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