Exam 14: Inflation: a Monetary Phenomenon

The largest component of M1 is:

Unanticipated inflation can result in:

Maria saves $300 each month in order to buy a house. In this example money is functioning as a:

According to the equation of exchange:

Wage and price controls are an example of an incomes policy.

Those depending on Social Security payments are adversely affected by inflation because Social Security is not indexed for inflation.

Use the following diagram to answer the following questions. -Refer to Diagram 14-2. In the above diagram, which of the following illustrates inflation caused by reduction in production of oil?

Fiscal policy cannot deal with inflation on a long-term basis.

Supply-side policies attempt to deal with inflation by:

Suppose borrowers and lenders underestimate the rate of inflation. In this case:

Who is most likely to lose as a result of unanticipated inflation?

According to the quantity theory of money:

As a result of unanticipated inflation,

Increases in the price of gasoline and oil tend to cause inflation

A theory emphasizing that the money supply is the principal determinant of nominal GDP is:

Economists argue that if an economy is highly monopolized:

A government established agency that controls the nation's money supply is a:

Deflation refers to:

If the economy suffers from inflation and unemployment as the result of a supply shock (such as reduction in oil production), expansionary fiscal or monetary policy would reduce unemployment but result in hyperinflation.

The rate of inflation will vary over the business cycle even if the growth rate of the money supply is constant.