Question 1

By purchasing a fixed-rate 30-year mortgage,inflation risk:

Accepted Answer

A) is eradicated. 
B) is spread equally to the borrower and lender. 
C) is passed from the lender to the borrower. 
D) is passed from the borrower to the lender. 
E) none of the above 
A) is eradicated. 
B) is spread equally to the borrower and lender. 
C) is passed from the lender to the borrower. 
D) is passed from the borrower to the lender. 
E) none of the above D

Question 2

According to the quantity theory of money,the price level is:

Accepted Answer

A) exogenous. 
B) determined by the money supply only. 
C) determined by the ratio of the effective quantity of money to the volume of goods. 
D) indeterminate in the long run. 
E) determined by the volume of goods produced. 
A) exogenous. 
B) determined by the money supply only. 
C) determined by the ratio of the effective quantity of money to the volume of goods. 
D) indeterminate in the long run. 
E) determined by the volume of goods produced. C

Question 3

The nominal interest rate is:

Accepted Answer

A) the interest rate not adjusted for inflation. 
B) the "advertised" interest rate. 
C) a description of the return in units of currency. 
D) all of the above 
E) none of the above 
A) the interest rate not adjusted for inflation. 
B) the "advertised" interest rate. 
C) a description of the return in units of currency. 
D) all of the above 
E) none of the above D

Question 4

In the United States,money is backed by:

Accepted Answer

A) oil. 
B) gold. 
C) silver. 
D) nothing. 
E) none of the above 
A) oil. 
B) gold. 
C) silver. 
D) nothing. 
E) none of the above

Question 5

If the inflation rate is higher than the nominal interest rate,the real interest rate is positive.

Accepted Answer

A) True 
 B)False

Question 6

If you decide to buy a house with an adjustable-rate mortgage (ARM),you are:

Accepted Answer

A) exposing yourself to inflation risk. 
B) reducing your inflation risk. 
C) passing inflation risk to the lender. 
D) taking on some of the lender's inflation risk. 
E) a and d 
A) exposing yourself to inflation risk. 
B) reducing your inflation risk. 
C) passing inflation risk to the lender. 
D) taking on some of the lender's inflation risk. 
E) a and d

Question 7

Alternative forms of money include:

Accepted Answer

A) frequent flier miles. 
B) gift cards. 
C) debit cards. 
D) PayPal. 
E) all of the above 
A) frequent flier miles. 
B) gift cards. 
C) debit cards. 
D) PayPal. 
E) all of the above

Question 8

Liquidity is a measure of:

Accepted Answer

A) the monetary base. 
B) how many coins are in circulation. 
C) how quickly coins can be melted down. 
D) how quickly an asset can be converted to currency. 
E) the amount of reserves. 
A) the monetary base. 
B) how many coins are in circulation. 
C) how quickly coins can be melted down. 
D) how quickly an asset can be converted to currency. 
E) the amount of reserves.

Question 9

Suppose you put $100 dollars in the bank on January 1,2007.If the annual nominal interest rate is 5 percent and the inflation rate is 5 percent,you will be able to buy __________ on January 1,2008.

Accepted Answer

A) $90 worth of goods 
B) $110 worth of goods 
C) $100 worth of goods 
D) $105 worth of goods 
E) $95 worth of goods 
A) $90 worth of goods 
B) $110 worth of goods 
C) $100 worth of goods 
D) $105 worth of goods 
E) $95 worth of goods

Question 10

In the quantity theory of money,the:

Accepted Answer

A) price level is exogenous. 
B) real GDP,velocity,and money supply are endogenous. 
C) real GDP and money supply are endogenous. 
D) real GDP,velocity,and money supply are exogenous. 
E) real GDP is endogenous. 
A) price level is exogenous. 
B) real GDP,velocity,and money supply are endogenous. 
C) real GDP and money supply are endogenous. 
D) real GDP,velocity,and money supply are exogenous. 
E) real GDP is endogenous.

Question 11

What contributed to Reagan's defeat of Carter in the 1980 presidential election?

Accepted Answer

A) double-digit inflation 
B) the low rate of unemployment 
C) the takeover of the U.S.embassy in Tehran,Iran 
D) Billy Carter's beer 
E) a and c 
A) double-digit inflation 
B) the low rate of unemployment 
C) the takeover of the U.S.embassy in Tehran,Iran 
D) Billy Carter's beer 
E) a and c

Question 12

The real interest rate describes:

Accepted Answer

A) the net return to government bonds. 
B) the rate of return adjusted for inflation. 
C) the rate of return in units of a currency. 
D) the return with an interest rate equal to zero. 
E) the rate of return in real goods. 
A) the net return to government bonds. 
B) the rate of return adjusted for inflation. 
C) the rate of return in units of a currency. 
D) the return with an interest rate equal to zero. 
E) the rate of return in real goods.

Question 13

A risk a bank takes on by offering long-term fixed interest rate loans is:

Accepted Answer

A) the loss of real returns due to anticipated inflation. 
B) the gain that could be made from offering short-term loans. 
C) the loss of real returns due to an unexpected inflation surprise. 
D) the gains that could have been made if the money were invested in an alternative asset. 
E) the loss of customers wanting flexible interest loans. 
A) the loss of real returns due to anticipated inflation. 
B) the gain that could be made from offering short-term loans. 
C) the loss of real returns due to an unexpected inflation surprise. 
D) the gains that could have been made if the money were invested in an alternative asset. 
E) the loss of customers wanting flexible interest loans.

Question 14

The real interest rate is:

Accepted Answer

A) the interest rate not adjusted for inflation. 
B) the "advertised" interest rate. 
C) a description of the return in units of currency. 
D) all of the above 
E) none of the above 
A) the interest rate not adjusted for inflation. 
B) the "advertised" interest rate. 
C) a description of the return in units of currency. 
D) all of the above 
E) none of the above

Question 15

Inflation is calculated as:

Accepted Answer

A) the overall price level. 
B) the rate of change of the price level. 
C) the percentage change in the price level. 
D) the difference in the price level. 
E) a and b 
A) the overall price level. 
B) the rate of change of the price level. 
C) the percentage change in the price level. 
D) the difference in the price level. 
E) a and b

Question 16

If some goods' prices adjust more quickly than others,there is:

Accepted Answer

A) a perfect short-run allocation of resources. 
B) a short-run misallocation of resources. 
C) no inflation. 
D) a hyperinflation. 
E) a deflation. 
A) a perfect short-run allocation of resources. 
B) a short-run misallocation of resources. 
C) no inflation. 
D) a hyperinflation. 
E) a deflation.

Question 17

The cure for hyperinflation is:

Accepted Answer

A) reducing money growth. 
B) reducing government spending. 
C) lower taxes. 
D) all of the above 
E) a and b 
A) reducing money growth. 
B) reducing government spending. 
C) lower taxes. 
D) all of the above 
E) a and b

Question 18

Money neutrality is the proposition that changes in money have no real effect on the economy.

Accepted Answer

A) True 
 B)False

Question 19

If income tax rates are based on nominal income,as inflation increases,taxpayers will see:

Accepted Answer

A) an increase in their real income. 
B) their taxes fall as their income falls. 
C) their taxes rise even though their real income is falling. 
D) an increase in the nominal income. 
E) their taxes fall even though their real income is rising. 
A) an increase in their real income. 
B) their taxes fall as their income falls. 
C) their taxes rise even though their real income is falling. 
D) an increase in the nominal income. 
E) their taxes fall even though their real income is rising.

Question 20

If the inflation rate is larger than the nominal interest rate,

Accepted Answer

A) unemployment rises. 
B) the real interest rate is zero. 
C) the real interest rate is negative. 
D) the real interest rate is larger than the nominal interest rate. 
E) Not enough information is given. 
A) unemployment rises. 
B) the real interest rate is zero. 
C) the real interest rate is negative. 
D) the real interest rate is larger than the nominal interest rate. 
E) Not enough information is given.

By purchasing a fixed-rate 30-year mortgage,inflation risk:

According to the quantity theory of money,the price level is:

The nominal interest rate is:

In the United States,money is backed by:

If the inflation rate is higher than the nominal interest rate,the real interest rate is positive.

If you decide to buy a house with an adjustable-rate mortgage (ARM),you are:

Alternative forms of money include:

Liquidity is a measure of:

Suppose you put $100 dollars in the bank on January 1,2007.If the annual nominal interest rate is 5 percent and the inflation rate is 5 percent,you will be able to buy __________ on January 1,2008.

In the quantity theory of money,the:

What contributed to Reagan's defeat of Carter in the 1980 presidential election?

The real interest rate describes:

A risk a bank takes on by offering long-term fixed interest rate loans is:

The real interest rate is:

Inflation is calculated as:

If some goods' prices adjust more quickly than others,there is:

The cure for hyperinflation is:

Money neutrality is the proposition that changes in money have no real effect on the economy.

If income tax rates are based on nominal income,as inflation increases,taxpayers will see:

If the inflation rate is larger than the nominal interest rate,

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 8: Inflation

By purchasing a fixed-rate 30-year mortgage,inflation risk:

According to the quantity theory of money,the price level is:

The nominal interest rate is:

In the United States,money is backed by:

If the inflation rate is higher than the nominal interest rate,the real interest rate is positive.

If you decide to buy a house with an adjustable-rate mortgage (ARM),you are:

Alternative forms of money include:

Liquidity is a measure of:

Suppose you put $100 dollars in the bank on January 1,2007.If the annual nominal interest rate is 5 percent and the inflation rate is 5 percent,you will be able to buy __________ on January 1,2008.

In the quantity theory of money,the:

What contributed to Reagan's defeat of Carter in the 1980 presidential election?

The real interest rate describes:

A risk a bank takes on by offering long-term fixed interest rate loans is:

The real interest rate is:

Inflation is calculated as:

If some goods' prices adjust more quickly than others,there is:

The cure for hyperinflation is:

Money neutrality is the proposition that changes in money have no real effect on the economy.

If income tax rates are based on nominal income,as inflation increases,taxpayers will see:

If the inflation rate is larger than the nominal interest rate,

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

The Solow Growth Model

Growth and Ideas

The Labor Market,wages,and Unemployment

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters