Question 1

​Which of the following would cause an increase in the velocity of money?

Accepted Answer

A) An increase in the use of credit cards 
B) An increase in the money supply 
C) An increase in the demand for money 
D) A decrease in the rate of interest 
E) A decrease in nominal GDP and a constant money supply 
A) An increase in the use of credit cards 
B) An increase in the money supply 
C) An increase in the demand for money 
D) A decrease in the rate of interest 
E) A decrease in nominal GDP and a constant money supply

Question 2

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

Accepted Answer

A) True 
 B)False

Question 3

​The demand for money is a relationship between:

Accepted Answer

A) the price level and the amount of cyclical unemployment. 
B) the price level and the actual output produced in an economy. 
C) the interest rate and how much money people choose to hold. 
D) the interest rate and how much money people earn during a certain time period. 
E) the interest rate and the rate of inflation. 
A) the price level and the amount of cyclical unemployment. 
B) the price level and the actual output produced in an economy. 
C) the interest rate and how much money people choose to hold. 
D) the interest rate and how much money people earn during a certain time period. 
E) the interest rate and the rate of inflation.

Question 4

​Other things constant,an increase in the real GDP of a country will:

Accepted Answer

A) increase the price level. 
B) shift the demand for money curve rightward. 
C) shift the demand for money curve leftward. 
D) decrease the nominal interest rate. 
E) decrease the quantity of money demanded. 
A) increase the price level. 
B) shift the demand for money curve rightward. 
C) shift the demand for money curve leftward. 
D) decrease the nominal interest rate. 
E) decrease the quantity of money demanded.

Question 5

​According to the equation of exchange,if the amount of money in an economy multiplied by the velocity of money equals 800 million dollars,then this economy's:

Accepted Answer

A) real GDP equals $800 million. 
B) nominal GDP equals $800 million. 
C) real GDP equals $800 million times the price level. 
D) nominal GDP equals $800 million times the price level. 
E) price level equals $800. 
A) real GDP equals $800 million. 
B) nominal GDP equals $800 million. 
C) real GDP equals $800 million times the price level. 
D) nominal GDP equals $800 million times the price level. 
E) price level equals $800.

Question 6

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy.The Fed can return the economy depicted by this figure to its potential output in the long run by: ​
Figure 15.4

Accepted Answer

A) selling US Treasury securities in the open market. 
B) lowering the discount rate. 
C) by lowering the reserve requirement. 
D) buying US Treasury securities in the open market. 
E) printing money. 
A) selling US Treasury securities in the open market. 
B) lowering the discount rate. 
C) by lowering the reserve requirement. 
D) buying US Treasury securities in the open market. 
E) printing money.

Question 7

​Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

Accepted Answer

A) The demand for money will decrease. 
B) The supply of money will increase. 
C) The rate of interest will decrease. 
D) The total investment spending in the economy will increase. 
E) The rate of interest will increase. 
A) The demand for money will decrease. 
B) The supply of money will increase. 
C) The rate of interest will decrease. 
D) The total investment spending in the economy will increase. 
E) The rate of interest will increase.

Question 8

​Which of the following changes will shift the money demand curve leftward?

Accepted Answer

A) An increase in the price level 
B) An increase in real GDP 
C) A decrease in the nominal interest rate 
D) An increase in the nominal interest rate 
E) A decrease in real GDP 
A) An increase in the price level 
B) An increase in real GDP 
C) A decrease in the nominal interest rate 
D) An increase in the nominal interest rate 
E) A decrease in real GDP

Question 9

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

Accepted Answer

A) True 
 B)False

Question 10

​An increase in the expected inflation rate causes:

Accepted Answer

A) the velocity of money to increase. 
B) the velocity of money to decrease. 
C) the actual inflation rate to fall. 
D) the actual price level to decrease. 
E) the money supply to increase. 
A) the velocity of money to increase. 
B) the velocity of money to decrease. 
C) the actual inflation rate to fall. 
D) the actual price level to decrease. 
E) the money supply to increase.

Question 11

​Which of the following is an example of an expansionary monetary policy?

Accepted Answer

A) A reduction in government purchases of goods and services 
B) An increase in the discount rate 
C) An open market sale of U.S.government securities 
D) A reduction in the required reserve ratio 
E) A tax cut 
A) A reduction in government purchases of goods and services 
B) An increase in the discount rate 
C) An open market sale of U.S.government securities 
D) A reduction in the required reserve ratio 
E) A tax cut

Question 12

​The demand for money in an economy is high when the:

Accepted Answer

A) real GDP is low. 
B) personal tax rate is low. 
C) unemployment rate is high. 
D) price level is high. 
E) interest rate is high. 
A) real GDP is low. 
B) personal tax rate is low. 
C) unemployment rate is high. 
D) price level is high. 
E) interest rate is high.

Question 13

Since the Federal Reserve was established in 1913,the U.S.has experienced three periods of high inflation and each was preceded and accompanied by a period of sharp decline in the money supply.

Accepted Answer

A) True 
 B)False

Question 14

​If interest rates are to remain constant,the money supply should change:

Accepted Answer

A) in the opposite direction to a change in aggregate demand. 
B) in the same direction as a change in money demand. 
C) only when investment changes. 
D) only when the demand for money decreases. 
E) only when the inflation rate changes. 
A) in the opposite direction to a change in aggregate demand. 
B) in the same direction as a change in money demand. 
C) only when investment changes. 
D) only when the demand for money decreases. 
E) only when the inflation rate changes.

Question 15

​The demand for money is based primarily on money's role as a(n):

Accepted Answer

A) measure of wealth. 
B) medium of exchange. 
C) standard of economic well-being. 
D) interest-bearing asset. 
E) non-interest-bearing asset. 
A) measure of wealth. 
B) medium of exchange. 
C) standard of economic well-being. 
D) interest-bearing asset. 
E) non-interest-bearing asset.

Question 16

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

Accepted Answer

A) constant price level. 
B) slowly increasing price level. 
C) slowly decreasing price level. 
D) stable 4 percent growth in real GDP. 
E) stable 4 percent growth in nominal GDP. 
A) constant price level. 
B) slowly increasing price level. 
C) slowly decreasing price level. 
D) stable 4 percent growth in real GDP. 
E) stable 4 percent growth in nominal GDP.

Question 17

For monetary policy to be effective in changing planned investment spending:

Accepted Answer

A) interest rates must not be responsive to changes in the money supply. 
B) interest rates must be sensitive to changes in Gross Domestic Product. 
C) investment must be sensitive to changes in interest rates. 
D) investment must be sensitive to changes in the price level. 
E) interest rates must be sensitive to changes in the price level. 
A) interest rates must not be responsive to changes in the money supply. 
B) interest rates must be sensitive to changes in Gross Domestic Product. 
C) investment must be sensitive to changes in interest rates. 
D) investment must be sensitive to changes in the price level. 
E) interest rates must be sensitive to changes in the price level.

Question 18

​An increase in investment can lead to a greater increase in aggregate demand if the value of the spending multiplier is:

Accepted Answer

A) greater than 1. 
B) less than 1 but more than zero. 
C) negative. 
D) exactly equal to zero. 
E) exactly equal to one. 
A) greater than 1. 
B) less than 1 but more than zero. 
C) negative. 
D) exactly equal to zero. 
E) exactly equal to one.

Question 19

​In the short run,a decrease in the money supply will lead to a(n):

Accepted Answer

A) decrease in Gross Domestic Product. 
B) increase in the price level. 
C) increase in aggregate demand. 
D) increase in the demand for money. 
E) decrease in the market interest rate. 
A) decrease in Gross Domestic Product. 
B) increase in the price level. 
C) increase in aggregate demand. 
D) increase in the demand for money. 
E) decrease in the market interest rate.

Question 20

​If the money supply in an economy equals $1,000 and nominal GDP equals $3,000,then according to the equation of exchange,velocity of money:

Accepted Answer

A) equals 1/3. 
B) equals 3. 
C) equals 3 million. 
D) cannot be determined since we do not know anything about prices. 
E) cannot be determined since we do not know anything about real GDP. 
A) equals 1/3. 
B) equals 3. 
C) equals 3 million. 
D) cannot be determined since we do not know anything about prices. 
E) cannot be determined since we do not know anything about real GDP.

Which of the following would cause an increase in the velocity of money?

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

The demand for money is a relationship between:

Other things constant,an increase in the real GDP of a country will:

According to the equation of exchange,if the amount of money in an economy multiplied by the velocity of money equals 800 million dollars,then this economy's:

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy.The Fed can return the economy depicted by this figure to its potential output in the long run by: Figure 15.4

Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

Which of the following changes will shift the money demand curve leftward?

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

An increase in the expected inflation rate causes:

Which of the following is an example of an expansionary monetary policy?

The demand for money in an economy is high when the:

Since the Federal Reserve was established in 1913,the U.S.has experienced three periods of high inflation and each was preceded and accompanied by a period of sharp decline in the money supply.

If interest rates are to remain constant,the money supply should change:

The demand for money is based primarily on money's role as a(n):

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

For monetary policy to be effective in changing planned investment spending:

An increase in investment can lead to a greater increase in aggregate demand if the value of the spending multiplier is:

In the short run,a decrease in the money supply will lead to a(n):

If the money supply in an economy equals $1,000 and nominal GDP equals $3,000,then according to the equation of exchange,velocity of money:

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 15: Monetary Theory and Policy

​Which of the following would cause an increase in the velocity of money?

The demand for money was high in the year 2015 when the interest rate on savings deposits and time deposits was close to zero.

​The demand for money is a relationship between:

​Other things constant,an increase in the real GDP of a country will:

​According to the equation of exchange,if the amount of money in an economy multiplied by the velocity of money equals 800 million dollars,then this economy's:

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy.The Fed can return the economy depicted by this figure to its potential output in the long run by: ​ Figure 15.4

​Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

​Which of the following changes will shift the money demand curve leftward?

The money demand curve shifts to the right whenever there is a decrease in the interest rate.

​An increase in the expected inflation rate causes:

​Which of the following is an example of an expansionary monetary policy?

​The demand for money in an economy is high when the:

Since the Federal Reserve was established in 1913,the U.S.has experienced three periods of high inflation and each was preceded and accompanied by a period of sharp decline in the money supply.

​If interest rates are to remain constant,the money supply should change:

​The demand for money is based primarily on money's role as a(n):

In an economy in which velocity of money in circulation is constant and real output grows at an average rate of 3 percent per year,a 5 percent average rate of growth in the money supply would result in a:

For monetary policy to be effective in changing planned investment spending:

​An increase in investment can lead to a greater increase in aggregate demand if the value of the spending multiplier is:

​In the short run,a decrease in the money supply will lead to a(n):

​If the money supply in an economy equals $1,000 and nominal GDP equals $3,000,then according to the equation of exchange,velocity of money:

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Macro Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Which of the following would cause an increase in the velocity of money?

The demand for money is a relationship between:

Other things constant,an increase in the real GDP of a country will:

According to the equation of exchange,if the amount of money in an economy multiplied by the velocity of money equals 800 million dollars,then this economy's:

The figure given below shows the aggregate demand curve and the short-run aggregate supply curve of an economy.The Fed can return the economy depicted by this figure to its potential output in the long run by: Figure 15.4

Which of the following will result in the money market when the price level in an economy rises,while the supply of money remains unchanged?

Which of the following changes will shift the money demand curve leftward?

An increase in the expected inflation rate causes:

Which of the following is an example of an expansionary monetary policy?

The demand for money in an economy is high when the:

If interest rates are to remain constant,the money supply should change:

The demand for money is based primarily on money's role as a(n):

An increase in investment can lead to a greater increase in aggregate demand if the value of the spending multiplier is:

In the short run,a decrease in the money supply will lead to a(n):

If the money supply in an economy equals $1,000 and nominal GDP equals $3,000,then according to the equation of exchange,velocity of money: