Exam 5: Inflation: Its Causes, Effects, and Social Costs

Most hyperinflations end with _____ reforms that eliminate the need for _____.

During inflation, does a rise in shoe leather cost signify change in velocity of money?

You are presented with the following equation: (1 + r )= (1 + i )/(1 +π). Expand the expression to solve for i. What assumption is required for this expression to be equal to the Fischer equation?

The costs of unexpected inflation, but not of expected inflation, are:

If there are no unexpected changes in money supply in an economy, can there still be unexpected inflation in the economy?

If consumption depends positively on the level of real balances and real balances depend negatively on the nominal interest rate in a neoclassical model, then the nominal interest rate:

In instances of hyperinflation, the delays involved in collecting taxes often result in:

The opportunity cost of holding money is the:

If the nominal interest increases, then:

If the Fed announces that it will raise the money supply in the future but does not change the money supply today,

If the money supply is held constant, then an increase in the nominal interest rate will ______ the demand for money and ______ the price level.

In the case of an unanticipated inflation:

Suppose a government has a tax revenue shortfall. Will hyperinflation inevitably follow unless the government cuts in its fiscal expenditures?

If the real interest rate declines by 1 percent and the inflation rate increases by 2 percent, the nominal interest rate must:

Using decade-long data across countries from 2000-2010, countries with high money growth tend to have _____ inflation.

The major source of government revenue in most countries that are experiencing hyperinflation is:

An example of a real variable is the:

Assume a simple economy where only burgers are traded. In a year, 100 burgers are traded at the rate of $5 per burger. Assume two scenarios: a. The economy has $100 in the form of 20 pieces of $5 bills. b. The economy has $100 in the form of 100 pieces of $1 bills. Calculate the velocity of money for both situations.