Exam 14: Wages,union,and Labor

What is the only factor that can continually increase in such a way as to bring about continued increases in aggregate demand,and thus bring about continued inflation? Give two reasons why government purchases cannot continually increase,and so cannot be the cause of continued inflation.

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Question 1

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The only factor that can continually increase and bring about continued inflation is the money supply.One reason that government purchases cannot increase continually is that there are real and political limits to government spending.The real limit would be 100% of GDP (where all resources in the economy are devoted to producing goods and services for the government).The political limit would likely be less than 100% of GDP,but it is a limit nonetheless.Either way,there is an upper limit to the amount of government purchases,beyond which further such purchases cannot be made.The second reason for a limit to government purchases has to do with crowding out.As the government spends more,many economists believe that private sector spending falls as a result.This leads to little,or no,change in aggregate demand.

The money supply rises from $1,800 billion to $1,908 billion.According to the simple quantity theory of money,the price level will _ by percent.

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Question 2

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Monetarists can be described as a group of macroeconomists who

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Question 3

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An increase in the money supply that leads to an increase in expected inflation,which in turn leads to an increase in the interest rate,is best described as the

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Question 4

According to the equation of exchange,if GDP equals $12,000 billion and the money supply equals $3,000 billion,the velocity of money

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Question 5

An increase in the expected inflation rate results in an increase in the real interest rate.

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Question 6

One-shot inflation can originate

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Question 7

When Milton Friedman said that "inflation is always and everywhere a monetary phenomenon," he was referring to

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Question 8

In symbols,the equation of exchange says

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Question 9

The income effect is the

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Question 10

Refer to Exhibit 14-2.The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7.Is this consistent with one-shot declines originating on the supply-side of the economy combined with continued increases in aggregate demand?

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Question 11

The simple quantity theory of money predicts that if

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Question 12

Grade inflation at colleges and universities is _ to general price inflation in that ______.

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Question 13

If M = $6,000,P = $10,and Q = 2,400,then V is

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Question 14

The equation of exchange is

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Question 15

The equation of exchange

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Question 16

The chief difference between one-shot inflation and continued inflation is that

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Question 17

Suppose we are at a long-run equilibrium point in an AD-AS model.Then the money supply falls.In the short run,is there any difference between what happens in the simple quantity theory of money (SQTM)version and the monetarist version of the model?

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Question 18

If the real interest rate is 4.1 percent and the expected inflation rate is 0.7 percent,the nominal interest rate is

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Question 19

When the Fed conducts open market operations,the impact of the buying or selling of bonds will include changes in

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Question 20

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Exam 14: Wages,union,and Labor

What is the only factor that can continually increase in such a way as to bring about continued increases in aggregate demand,and thus bring about continued inflation? Give two reasons why government purchases cannot continually increase,and so cannot be the cause of continued inflation.

The money supply rises from $1,800 billion to $1,908 billion.According to the simple quantity theory of money,the price level will ___________ by __________ percent.

Monetarists can be described as a group of macroeconomists who

An increase in the money supply that leads to an increase in expected inflation,which in turn leads to an increase in the interest rate,is best described as the

According to the equation of exchange,if GDP equals $12,000 billion and the money supply equals $3,000 billion,the velocity of money

An increase in the expected inflation rate results in an increase in the real interest rate.

One-shot inflation can originate

When Milton Friedman said that "inflation is always and everywhere a monetary phenomenon," he was referring to

In symbols,the equation of exchange says

The income effect is the

Refer to Exhibit 14-2.The economy moves from point 1 to 2 to 3 to 4 to 5 to 6 to 7.Is this consistent with one-shot declines originating on the supply-side of the economy combined with continued increases in aggregate demand?

The simple quantity theory of money predicts that if

Grade inflation at colleges and universities is _________ to general price inflation in that ______________.

If M = $6,000,P = $10,and Q = 2,400,then V is

The equation of exchange is

The equation of exchange

The chief difference between one-shot inflation and continued inflation is that

Suppose we are at a long-run equilibrium point in an AD-AS model.Then the money supply falls.In the short run,is there any difference between what happens in the simple quantity theory of money (SQTM)version and the monetarist version of the model?

If the real interest rate is 4.1 percent and the expected inflation rate is 0.7 percent,the nominal interest rate is

When the Fed conducts open market operations,the impact of the buying or selling of bonds will include changes in

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The money supply rises from $1,800 billion to $1,908 billion.According to the simple quantity theory of money,the price level will _ by percent.

Grade inflation at colleges and universities is _ to general price inflation in that ______.