Exam 8: Inflation

Suppose you put $100 dollars in the bank on January 1, 2013. If the annual nominal interest rate is 5 percent and the inflation rate is 2 percent, you will be able to buy ________ worth of goods on January 1, 2014.

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

The costs associated with changing prices in times of inflation are called:

In the text, the country that experienced the highest inflation rate in 1990 was:

Figure 8.1: Money Growth and Inflation in the United States by Decade -The data presented in Figure 8.1 confirm that the relationship between inflation and money growth is:

Negative inflationary surprises lead to:

The real interest rate describes:

Inflation is calculated as:

Suppose you put $100 dollars in the bank on January 1, 2013. If the annual nominal interest rate is 2 percent and the inflation rate is 5 percent, you will be able to buy ________ worth of goods on January 1, 2014.

The essence of the quantity theory of money is that:

Liquidity is a measure of:

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

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

The costs associated with changing prices are called menu costs.

The cure for hyperinflation is:

The implications of the quantity theory of money are the main basis for which of the following quotes?

Inflationary surprises transfer wealth from lenders to borrowers.

Explain how increases in government expenditures can lead to inflation.

Using the quantity equation, if M_t = $1,000, P_t = 1.1, and V_t = 11, then real GDP is:

If the real interest rate is less than zero, it implies that the real interest rate deviates from the marginal product of capital in the short run.