Exam 17: Money Growth and Inflation: The Classical Theory of Inflation

An associate professor of physics gets a $200 a month raise.She figures that with her new monthly salary she can buy more goods and services than she could buy last year.

Suppose that M is fixed.According to the quantity equation,which of the following would make the price level higher?

The price level rises if either

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

The nominal interest rate is 5 percent and the real interest rate is 3 percent.What is the inflation rate?

If the Fed increases the money supply,then 1/P

The nominal interest rate is 3.5 percent and the inflation rate is 1.5 percent.What is the real interest rate?

When the money market is drawn with the value of money on the vertical axis,as the price level decreases,the value of money

Which of the following is correct?

According to the classical dichotomy,which of the following is influenced by monetary factors?

Economic variables whose values are measured in goods are called

When the money market is drawn with the value of money on the vertical axis,if the Fed sells bonds then

Governments may prefer an inflation tax to some other type of tax because the inflation tax

If money is neutral and velocity is stable,an increase in the money supply creates a proportional increase in

The price of a Honda Accord

The principle of monetary neutrality implies that an increase in the money supply will

As the price level rises,the value of money

Based on the quantity equation,if M = 150,V = 4,and Y = 300,then P =

According to the quantity equation,the price level would change less than proportionately with a rise in the money supply if there were also

When the money market is drawn with the value of money on the vertical axis,the money demand curve slopes