Question 1

The quantity theory of money states that

Accepted Answer

A)  P x Q = M x V 
B)  P x M = Q x V 
C)  P x V = Q x M 
D)  P x V = P x V 
E)  V = 5 
A)  P x Q = M x V 
B)  P x M = Q x V 
C)  P x V = Q x M 
D)  P x V = P x V 
E)  V = 5

Question 2

Real GDP can never be greater than potential GDP.

Accepted Answer

A) True 
 B)False

Question 3

The quantity theory of money assumes that ________ are fixed.

Accepted Answer

A)  V and P 
B)  P and M 
C)  V and Q 
D)  P and Q 
E)  V and M 
A)  V and P 
B)  P and M 
C)  V and Q 
D)  P and Q 
E)  V and M

Question 4

When cyclical unemployment is high, the economy is having

Accepted Answer

A)  a peak in the business cycle. 
B)  an inflationary gap. 
C)  a recession. 
D)  less than normal structural unemployment. 
E)  less than normal frictional unemployment. 
A)  a peak in the business cycle. 
B)  an inflationary gap. 
C)  a recession. 
D)  less than normal structural unemployment. 
E)  less than normal frictional unemployment.

Question 5

When the economy has a recessionary gap, cyclical unemployment is probably

Accepted Answer

A)  negative. 
B)  impossible. 
C)  zero. 
D)  healthy. 
E)  positive. 
A)  negative. 
B)  impossible. 
C)  zero. 
D)  healthy. 
E)  positive.

Question 6

Inflation is a persistent rise in average of all prices in the aggregate economy.

Accepted Answer

A) True 
 B)False

Question 7

Inflation is a persistent rise in the average velocity of money in the aggregate economy.

Accepted Answer

A) True 
 B)False

Question 8

Nominal interest rates can never be less than real interest rates.

Accepted Answer

A) True 
 B)False

Question 9

The natural rate of unemployment is the

Accepted Answer

A)  rate where unemployment equals 0 percent. 
B)  same as cyclical unemployment. 
C)  rate where frictional unemployment equals 0 percent. 
D)  rate where cyclical unemployment equals 0 percent. 
E)  rate where frictional plus structural unemployment equals 0 percent. 
A)  rate where unemployment equals 0 percent. 
B)  same as cyclical unemployment. 
C)  rate where frictional unemployment equals 0 percent. 
D)  rate where cyclical unemployment equals 0 percent. 
E)  rate where frictional plus structural unemployment equals 0 percent.

Question 10

Rising energy prices are consistent with the cost-push story of inflation.

Accepted Answer

A) True 
 B)False

Question 11

Frictional unemployment is not a problem that policymakers need to address.

Accepted Answer

A) True 
 B)False

Question 12

The original Phillips Curve shows an immediate inverse relationship between unemployment and inflation.

Accepted Answer

A) True 
 B)False

Question 13

In a recessionary gap, frictional unemployment can temporarily fall below normal full employment levels.

Accepted Answer

A) True 
 B)False

Question 14

In a country with a population of 500 million, there are 300 million employed and 20 million unemployed. What is the labour force (in millions)?

Accepted Answer

A)  500 
B)  300 
C)  20 
D)  280 
E)  320 
A)  500 
B)  300 
C)  20 
D)  280 
E)  320

Question 15

An increase in the quantity of money causes inflation because consumers with more money bid against each other for unchanged quantities of products and services, pushing up prices.

Accepted Answer

A) True 
 B)False

Question 16

When there is demand-pull inflation, cyclical unemployment is high.

Accepted Answer

A) True 
 B)False

Question 17

The quantity theory of money suggests that an 8 percent decrease in the money supply must be matched by an 8 percent increase in velocity.

Accepted Answer

A) True 
 B)False

Question 18

If aggregate spending is 200 and the money supply is 80, then the velocity of money is 2.5.

Accepted Answer

A) True 
 B)False

Question 19

Energy price increases are a positive supply shock.

Accepted Answer

A) True 
 B)False

Question 20

Which type of unemployment is a healthy part of a changing economy, and also a problem that needs fixing?

Accepted Answer

A)  frictional 
B)  natural 
C)  structural 
D)  cyclical 
E)  seasonal 
A)  frictional 
B)  natural 
C)  structural 
D)  cyclical 
E)  seasonal

The quantity theory of money states that

Real GDP can never be greater than potential GDP.

The quantity theory of money assumes that ________ are fixed.

When cyclical unemployment is high, the economy is having

When the economy has a recessionary gap, cyclical unemployment is probably

Inflation is a persistent rise in average of all prices in the aggregate economy.

Inflation is a persistent rise in the average velocity of money in the aggregate economy.

Nominal interest rates can never be less than real interest rates.

The natural rate of unemployment is the

Rising energy prices are consistent with the cost-push story of inflation.

Frictional unemployment is not a problem that policymakers need to address.

The original Phillips Curve shows an immediate inverse relationship between unemployment and inflation.

In a recessionary gap, frictional unemployment can temporarily fall below normal full employment levels.

In a country with a population of 500 million, there are 300 million employed and 20 million unemployed. What is the labour force (in millions)?

An increase in the quantity of money causes inflation because consumers with more money bid against each other for unchanged quantities of products and services, pushing up prices.

When there is demand-pull inflation, cyclical unemployment is high.

The quantity theory of money suggests that an 8 percent decrease in the money supply must be matched by an 8 percent increase in velocity.

If aggregate spending is 200 and the money supply is 80, then the velocity of money is 2.5.

Energy price increases are a positive supply shock.

Which type of unemployment is a healthy part of a changing economy, and also a problem that needs fixing?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

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Exam 7: Costs of Not Working and Living: Unemployment and Inflation

The quantity theory of money states that

Real GDP can never be greater than potential GDP.

The quantity theory of money assumes that ________ are fixed.

When cyclical unemployment is high, the economy is having

When the economy has a recessionary gap, cyclical unemployment is probably

Inflation is a persistent rise in average of all prices in the aggregate economy.

Inflation is a persistent rise in the average velocity of money in the aggregate economy.

Nominal interest rates can never be less than real interest rates.

The natural rate of unemployment is the

Rising energy prices are consistent with the cost-push story of inflation.

Frictional unemployment is not a problem that policymakers need to address.

The original Phillips Curve shows an immediate inverse relationship between unemployment and inflation.

In a recessionary gap, frictional unemployment can temporarily fall below normal full employment levels.

In a country with a population of 500 million, there are 300 million employed and 20 million unemployed. What is the labour force (in millions)?

An increase in the quantity of money causes inflation because consumers with more money bid against each other for unchanged quantities of products and services, pushing up prices.

When there is demand-pull inflation, cyclical unemployment is high.

The quantity theory of money suggests that an 8 percent decrease in the money supply must be matched by an 8 percent increase in velocity.

If aggregate spending is 200 and the money supply is 80, then the velocity of money is 2.5.

Energy price increases are a positive supply shock.

Which type of unemployment is a healthy part of a changing economy, and also a problem that needs fixing?

Whats in Economics for You Scarcity, Opportunity Cost, Trade, and Models

Making Smart Choices: the Law of Demand

Show Me the Money: the Law of Supply

Coordinating Smart Choices: Demand and Supply

Are Your Smart Choices Smart for All Macroeconomics and Microeconomics

Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Skating to Where the Puck Is Going: Aggregate Supply and Aggregate Demand

Money Is for Lunatics: Demanders and Suppliers of Money

Trading Dollars for Dollars Exchange Rates and Payments With the Rest of the World

Steering Blindly Monetary Policy and the Bank of Canada

Spending Others Money: Fiscal Policy, Deficits, and National Debt

Are Sweatshops All Bad Globalization and Trade Policy

Filters