Question 1

As the price level rises, money __________ causing interest rates to __________ and investment spending to __________.

Accepted Answer

A) demand rises; fall; fall 
B) demand rises; rise; fall 
C) demand falls; rise; rise 
D) supply rises; rise; fall 
E) supply falls; fall; rise 
A) demand rises; fall; fall 
B) demand rises; rise; fall 
C) demand falls; rise; rise 
D) supply rises; rise; fall 
E) supply falls; fall; rise

Question 2

Velocity 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 3

The demand for money

Accepted Answer

A) is unrelated to the interest rate 
B) is directly related to the interest rate 
C) is inversely related to the interest rate 
D) is inversely related to the volume of transactions 
E) is largely independent of the volume of transactions 
A) is unrelated to the interest rate 
B) is directly related to the interest rate 
C) is inversely related to the interest rate 
D) is inversely related to the volume of transactions 
E) is largely independent of the volume of transactions

Question 4

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 spending multiplier 
E) the spending multiplier must be stable 
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 spending multiplier 
E) the spending multiplier must be stable

Question 5

If the Fed increases the money supply, GDP

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 6

If the Fed targets the interest rate, then

Accepted Answer

A) the money supply will grow at a more controlled rate 
B) monetary policy will reinforce fluctuations in economic activity 
C) the price level will be more stable in the long run 
D) money demand will be more stable 
E) velocity will be less stable 
A) the money supply will grow at a more controlled rate 
B) monetary policy will reinforce fluctuations in economic activity 
C) the price level will be more stable in the long run 
D) money demand will be more stable 
E) velocity will be less stable

As the price level rises, money causing interest rates to and investment spending to __.

Velocity measures

The demand for money

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

If the Fed increases the money supply, GDP

If the Fed targets the interest rate, then

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and 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 17: Monetary Theory and Policy

As the price level rises, money __________ causing interest rates to __________ and investment spending to __________.

Velocity measures

The demand for money

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

If the Fed increases the money supply, GDP

If the Fed targets the interest rate, then

The Art and Science of Economic Analysis

Understanding Graphs-Appendix

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Agregate Demand

Aggregate Expenditure and 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

As the price level rises, money causing interest rates to and investment spending to __.