Question 1

​The money demand curve will shift when there is a change in the:

Accepted Answer

A) unemployment rate. 
B) inflation rate. 
C) money supply. 
D) nominal interest rate. 
E) price level. 
A) unemployment rate. 
B) inflation rate. 
C) money supply. 
D) nominal interest rate. 
E) price level.

Question 2

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

Accepted Answer

A) True 
 B)False

Question 3

​When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand:

Accepted Answer

A) the increase in real GDP will be relatively small and the increase in the price level will be relatively large. 
B) the increase in real GDP will be relatively large and the increase in the price level will be relatively small. 
C) the increase in both real GDP and the price level will be large. 
D) the increase in both real GDP and the price level will be small. 
E) the decrease in real GDP will be larger than the decrease in the price level. 
A) the increase in real GDP will be relatively small and the increase in the price level will be relatively large. 
B) the increase in real GDP will be relatively large and the increase in the price level will be relatively small. 
C) the increase in both real GDP and the price level will be large. 
D) the increase in both real GDP and the price level will be small. 
E) the decrease in real GDP will be larger than the decrease in the price level.

Question 4

​Most policy makers agree that in the long run,changes in the money supply influence:

Accepted Answer

A) the price level and inflation. 
B) the real interest rate and aggregate demand. 
C) the planned investment expenditure. 
D) the exchange rate. 
E) the potential GDP and unemployment. 
A) the price level and inflation. 
B) the real interest rate and aggregate demand. 
C) the planned investment expenditure. 
D) the exchange rate. 
E) the potential GDP and unemployment.

Question 5

​The behavior of the M1 velocity of money in recent years can be explained by:

Accepted Answer

A) stability of interest rates. 
B) a low and stable rate of inflation. 
C) monetary policy that has been successful in stabilizing the economy. 
D) financial innovation creating new substitutes for M1 money. 
E) a large number of banks and savings and loan associations going bankrupt. 
A) stability of interest rates. 
B) a low and stable rate of inflation. 
C) monetary policy that has been successful in stabilizing the economy. 
D) financial innovation creating new substitutes for M1 money. 
E) a large number of banks and savings and loan associations going bankrupt.

Question 6

​A movement upward and to the left along the money demand curve is caused by:

Accepted Answer

A) an increase in the interest rate. 
B) a decrease in the interest rate. 
C) a decrease in real GDP. 
D) an increase in real GDP. 
E) an increase in the average price level. 
A) an increase in the interest rate. 
B) a decrease in the interest rate. 
C) a decrease in real GDP. 
D) an increase in real GDP. 
E) an increase in the average price level.

Question 7

Before 2008,money market mutual funds and hedge funds had been out of Fed's scope and control because they did not rely on customer deposits.

Accepted Answer

A) True 
 B)False

Question 8

​The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is at point "e" in the short run,which of these policies adopted by the Fed is likely to return it to long-run equilibrium? ​
Figure 15.3

Accepted Answer

A) A decrease in government spending 
B) An increase in the tax rate 
C) A decrease in the tax rate 
D) A decrease in the money supply 
E) An increase in the money supply 
A) A decrease in government spending 
B) An increase in the tax rate 
C) A decrease in the tax rate 
D) A decrease in the money supply 
E) An increase in the money supply

Question 9

​Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

Accepted Answer

A) The demand for money increases 
B) Planned investment spending increases 
C) Interest rate increases 
D) Aggregate expenditure increases 
E) The demand for money decreases 
A) The demand for money increases 
B) Planned investment spending increases 
C) Interest rate increases 
D) Aggregate expenditure increases 
E) The demand for money decreases

Question 10

​If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply,aggregate demand:

Accepted Answer

A) falls,which increases real GDP and the price level. 
B) increases,which decreases real GDP and the price level. 
C) falls,which decreases real GDP and increases the price level. 
D) increases,which decreases real GDP and increases the price level. 
E) increases,which increases real GDP and the price level. 
A) falls,which increases real GDP and the price level. 
B) increases,which decreases real GDP and the price level. 
C) falls,which decreases real GDP and increases the price level. 
D) increases,which decreases real GDP and increases the price level. 
E) increases,which increases real GDP and the price level.

Question 11

When the Fed is targeting the money supply,it has complete control over the interest rate.

Accepted Answer

A) True 
 B)False

Question 12

​The velocity of money in circulation measures:

Accepted Answer

A) the average length of time that people hold wealth. 
B) how fast aggregate spending will increase for a given decline in money demand. 
C) how fast inflation will rise for a given increase in the money supply. 
D) how quickly money changes hands 
E) how quickly banks can create money. 
A) the average length of time that people hold wealth. 
B) how fast aggregate spending will increase for a given decline in money demand. 
C) how fast inflation will rise for a given increase in the money supply. 
D) how quickly money changes hands 
E) how quickly banks can create money.

Question 13

​In the long run,if the money supply increases:

Accepted Answer

A) most of the resulting rise in nominal GDP will be a result of increases in the exchange rate. 
B) most of the resulting rise in nominal GDP will be a result of increases in the price level. 
C) most of the resulting rise in real GDP will be a result of increases in the price level. 
D) most of the resulting rise in real GDP will be a result of increases in the interest rate. 
E) most of the resulting rise in real GDP will be a result of increases in aggregate expenditure. 
A) most of the resulting rise in nominal GDP will be a result of increases in the exchange rate. 
B) most of the resulting rise in nominal GDP will be a result of increases in the price level. 
C) most of the resulting rise in real GDP will be a result of increases in the price level. 
D) most of the resulting rise in real GDP will be a result of increases in the interest rate. 
E) most of the resulting rise in real GDP will be a result of increases in aggregate expenditure.

Question 14

​Monetary policy will be effective in changing the gross domestic product of a nation only if:

Accepted Answer

A) planned investment expenditures are autonomous. 
B) planned investment expenditures are sensitive to interest rates 
C) interest rates are unresponsive to changes in money supply 
D) interest rates are sensitive to changes in the price level 
E) planned investment expenditures are sensitive to interest rates. 
A) planned investment expenditures are autonomous. 
B) planned investment expenditures are sensitive to interest rates 
C) interest rates are unresponsive to changes in money supply 
D) interest rates are sensitive to changes in the price level 
E) planned investment expenditures are sensitive to interest rates.

Question 15

When calculating how much changes in the money supply will change nominal GDP,we use the money multiplier instead of the spending multiplier.

Accepted Answer

A) True 
 B)False

Question 16

​If the Fed sells U.S.government securities in the open market,gross domestic product:

Accepted Answer

A) increases because the resulting increase in the interest rate leads to a decrease in investment. 
B) increases because the resulting decrease in the interest rate leads to an increase in investment. 
C) decreases because the resulting increase in the interest rate leads to a decrease in investment. 
D) decreases because the resulting increase in the interest rate leads to an increase in investment. 
E) decreases because the resulting decrease in the interest rate leads to an increase in investment. 
A) increases because the resulting increase in the interest rate leads to a decrease in investment. 
B) increases because the resulting decrease in the interest rate leads to an increase in investment. 
C) decreases because the resulting increase in the interest rate leads to a decrease in investment. 
D) decreases because the resulting increase in the interest rate leads to an increase in investment. 
E) decreases because the resulting decrease in the interest rate leads to an increase in investment.

Question 17

​At a given point in time,if the demand for money increases:

Accepted Answer

A) the interest rate will fall. 
B) there will be a movement downward along the money demand curve. 
C) there will be a movement upward along the money demand curve. 
D) there will be a rightward shift of the money demand curve. 
E) there will be a leftward shift of the money demand curve. 
A) the interest rate will fall. 
B) there will be a movement downward along the money demand curve. 
C) there will be a movement upward along the money demand curve. 
D) there will be a rightward shift of the money demand curve. 
E) there will be a leftward shift of the money demand curve.

Question 18

​Other things constant,an increase in the price level will:

Accepted Answer

A) shift the money demand curve to the right. 
B) shift the money demand curve to the left. 
C) increase the quantity of money people want to hold. 
D) decrease the quantity of money people want to hold. 
E) have no impact on the money demand curve. 
A) shift the money demand curve to the right. 
B) shift the money demand curve to the left. 
C) increase the quantity of money people want to hold. 
D) decrease the quantity of money people want to hold. 
E) have no impact on the money demand curve.

Question 19

​If real output and velocity are stable and predictable,then the equation of exchange can be used to derive a simple relationship between:

Accepted Answer

A) the money supply and the price level. 
B) the money supply and the interest rate. 
C) the money supply and the foreign exchange rate. 
D) unemployment and aggregate demand. 
E) unemployment and nominal GDP. 
A) the money supply and the price level. 
B) the money supply and the interest rate. 
C) the money supply and the foreign exchange rate. 
D) unemployment and aggregate demand. 
E) unemployment and nominal GDP.

Question 20

​If the Fed purchases U.S.government securities,gross domestic product:

Accepted Answer

A) increases because the resulting increase in the interest rate leads to a decrease in investment. 
B) increases because the resulting decrease in the interest rate leads to an increase in investment. 
C) decreases because the resulting increase in the interest rate leads to a decrease in investment. 
D) decreases because the resulting increase in the interest rate leads to an increase in investment. 
E) decreases because the resulting decrease in the interest rate leads to an increase in investment. 
A) increases because the resulting increase in the interest rate leads to a decrease in investment. 
B) increases because the resulting decrease in the interest rate leads to an increase in investment. 
C) decreases because the resulting increase in the interest rate leads to a decrease in investment. 
D) decreases because the resulting increase in the interest rate leads to an increase in investment. 
E) decreases because the resulting decrease in the interest rate leads to an increase in investment.

The money demand curve will shift when there is a change in the:

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand:

Most policy makers agree that in the long run,changes in the money supply influence:

The behavior of the M1 velocity of money in recent years can be explained by:

A movement upward and to the left along the money demand curve is caused by:

Before 2008,money market mutual funds and hedge funds had been out of Fed's scope and control because they did not rely on customer deposits.

The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is at point "e" in the short run,which of these policies adopted by the Fed is likely to return it to long-run equilibrium? Figure 15.3

Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply,aggregate demand:

When the Fed is targeting the money supply,it has complete control over the interest rate.

The velocity of money in circulation measures:

In the long run,if the money supply increases:

Monetary policy will be effective in changing the gross domestic product of a nation only if:

When calculating how much changes in the money supply will change nominal GDP,we use the money multiplier instead of the spending multiplier.

If the Fed sells U.S.government securities in the open market,gross domestic product:

At a given point in time,if the demand for money increases:

Other things constant,an increase in the price level will:

If real output and velocity are stable and predictable,then the equation of exchange can be used to derive a simple relationship between:

If the Fed purchases U.S.government securities,gross domestic product:

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

​The money demand curve will shift when there is a change in the:

The Dodd-Frank Act gave the Fed and the FDIC expanded oversight of large financial institutions,including those that were not depository institutions.

​When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand:

​Most policy makers agree that in the long run,changes in the money supply influence:

​The behavior of the M1 velocity of money in recent years can be explained by:

​A movement upward and to the left along the money demand curve is caused by:

Before 2008,money market mutual funds and hedge funds had been out of Fed's scope and control because they did not rely on customer deposits.

​The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is at point "e" in the short run,which of these policies adopted by the Fed is likely to return it to long-run equilibrium? ​ Figure 15.3

​Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

​If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply,aggregate demand:

When the Fed is targeting the money supply,it has complete control over the interest rate.

​The velocity of money in circulation measures:

​In the long run,if the money supply increases:

​Monetary policy will be effective in changing the gross domestic product of a nation only if:

When calculating how much changes in the money supply will change nominal GDP,we use the money multiplier instead of the spending multiplier.

​If the Fed sells U.S.government securities in the open market,gross domestic product:

​At a given point in time,if the demand for money increases:

​Other things constant,an increase in the price level will:

​If real output and velocity are stable and predictable,then the equation of exchange can be used to derive a simple relationship between:

​If the Fed purchases U.S.government securities,gross domestic product:

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

The money demand curve will shift when there is a change in the:

When the short-run aggregate supply curve is steep,then for a given increase in aggregate demand:

Most policy makers agree that in the long run,changes in the money supply influence:

The behavior of the M1 velocity of money in recent years can be explained by:

A movement upward and to the left along the money demand curve is caused by:

The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is at point "e" in the short run,which of these policies adopted by the Fed is likely to return it to long-run equilibrium? Figure 15.3

Which of the following changes is most likely to happen when there is a decrease in the supply of money in a market that was initially in equilibrium?

If the short-run aggregate supply curve is positively sloped and the Fed increases the money supply,aggregate demand:

The velocity of money in circulation measures:

In the long run,if the money supply increases:

Monetary policy will be effective in changing the gross domestic product of a nation only if:

If the Fed sells U.S.government securities in the open market,gross domestic product:

At a given point in time,if the demand for money increases:

Other things constant,an increase in the price level will:

If real output and velocity are stable and predictable,then the equation of exchange can be used to derive a simple relationship between:

If the Fed purchases U.S.government securities,gross domestic product: