Exam 17: Monetary Theory and Policy

The advantage of money as a store of value is

If the money supply is $300, the price level is $4, and real GDP is $1,500, what is the nominal value of output?

In the history of monetary policy, the period of October 1979 to October 1982 was notable for

If something causes the velocity of money to increase, the same amount of money will

Economic theory suggests that

If the Fed increases the federal funds rate

An increase in aggregate demand will have a smaller long-run effect on real GDP if the

The velocity of M1 money has moved erratically in the past several years because

If the Fed sells government securities to banks, eventually we expect

Exhibit 16-4 -In Exhibit 16-4, short-run equilibrium occurs

If the price level rises, then the

The supply of money is depicted diagrammatically as a vertical line because the quantity of money supplied is totally dependent on the rate of interest.

The velocity of money is defined as

If the Fed wants to close a contractionary gap, it might

Suppose that the demand and supply of money are initially in equilibrium, and that the demand for money increases. A monetary authority interested in keeping the money supply constant and the interest rate low must

The demand curve for investment is graphed with __________ on the vertical axis and __________ on the horizontal axis.

For the quantity theory of money to yield useful predictions,

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

In an economy in which velocity 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

If the demand for money increases,