1、Name: _ Date: _1. The rate of inflation is the:A) median level of prices.B) average level of prices.C) percentage change in the level of prices.D) measure of the overall level of prices.2. The definition of the transactions velocity of money is:A) money multiplied by prices divided by transactions.B
2、) transactions divided by prices multiplied by money.C) money divided by prices multiplied by transactions.D) prices multiplied by transactions divided by money.3. If there are 100 transactions in a year and the average value of each transaction is $10, then if there is $200 of money in the economy,
3、 transactions velocity is _ times per year.A) 0.2B) 2C) 5D) 104. If the transactions velocity of money remains constant while the quantity of money doubles, the:A) price of the average transaction must double.B) number of transactions must remain constant.C) price of the average transaction multipli
4、ed by the number of transactions must remain constant.D) price of the average transaction multiplied by the number of transactions must double.5. The quantity equation, viewed as an identity, is a definition of the:A) quantity of money.B) quantity of transactions.C) price level.D) transactions veloc
5、ity of money.6. The income velocity of money:A) is defined in the identity MV = PY.B) is defined in the identity MV = PT.C) is the same thing as the transactions velocity of money.D) is the same as the number of times a dollar bill changes hands.7. The transactions velocity of money indicates the _
6、in a given period, while the income velocity of money indicates the _ in a given period.A) number of transactions; amount of income earnedB) quantity of money used for transactions; quantity of money paid as incomeC) number of times a dollar bill changes hands; number of times a dollar bill enters s
7、omeones incomeD) volume of transactions; flow of income8. Real money balances equal the:A) sum of coin, currency, and balances in checking accounts.B) amount of money expressed in terms of the quantity of goods and services it can purchase.C) number of dollars used as a medium of exchange.D) quantit
8、y of money created by the Federal Reserve.9. If the average price of goods and services in the economy equals $10 and the quantity of money in the economy equals $200,000, then real balances in the economy equal:A) 10.B) 20,000.C) 200,000.D) 2,000,000.10. The demand for real money balances is genera
9、lly assumed to:A) be exogenous.B) be constant.C) increase as real income increases.D) decrease as real income increases.11. If the quantity of real money balances is kY, where k is a constant, then velocity is:A) k.B) 1/k.C) kP.D) P/k.12. If the demand for real money balances is proportional to real
10、 income, velocity will:A) increase as income increases.B) increase as income decreases.C) vary directly with the interest rate.D) remain constant.13. When the demand for money parameter, k, is large, the velocity of money is _ and money is changing hands _A) large; frequentlyB) large; infrequentlyC)
11、 small; frequentlyD) small; infrequently14. Consider the money demand function that takes the form (M/P)d = kY, where M is the quantity of money, P is the price level, k is a constant, and Y is real output. If the money supply is growing at a 10 percent rate, real output is growing at a 3 percent ra
12、te, and k is constant, what is the average inflation rate in this economy?A) 3 percentB) 7 percentC) 10 percentD) 13 percent15. The income velocity of money increases and the money demand parameter k _ when people want to hold _ money.A) increases; moreB) increases; lessC) decreases; moreD) decrease
13、s; less16. The quantity equation for money, by itself:A) may be thought of as a definition for velocity of money.B) implies that the velocity of money is constant.C) implies that the price level is proportional to the money supply.D) implies that real gross domestic product (GDP) is proportional to
14、the money supply.17. The quantity theory of money assumes that:A) income is constant.B) velocity is constant.C) prices are constant.D) the money supply is constant.18. If income velocity is assumed to be constant, but no other assumptions are made, the level of _ is determined by M.A) pricesB) incom
15、eC) transactionsD) nominal GDP19. If velocity is constant and, in addition, the factors of production and the production function determine real GDP, then:A) the price level is proportional to the money supply.B) real GDP is proportional to the money supply.C) the price level is fixed.D) nominal GDP
16、 is fixed.20. In the long run, according to the quantity theory of money and the classical macroeconomic theory, if velocity is constant, then _ determines real GDP and _ determines nominal GDP.A) the productive capability of the economy; the money supplyB) the money supply; the productive capabilit
17、y of the economyC) velocity; the money supplyD) the money supply; velocity21. According to the quantity theory of money, ultimate control over the rate of inflation in the United States is exercised by:A) the Organization of Petroleum Exporting Countries (OPEC).B) the U.S. Treasury.C) the Federal Re
18、serve.D) private citizens.22. According to the quantity theory of money, if money is growing at a 10 percent rate and real output is growing at a 3 percent rate, but velocity is growing at increasingly faster rates over time as a result of financial innovation, the rate of inflation must be:A) incre
19、asing.B) decreasing.C) 7 percent.D) constant.23. If the money supply increases 12 percent, velocity decreases 4 percent, and the price level increases 5 percent, then the change in real GDP must be _ percent.A) 3B) 4C) 9D) 1124. Percentage change in P is approximately equal to the percentage change
20、in:A) M.B) M minus percentage change in Y.C) M minus percentage change in Y plus percentage change in velocity.D) M minus percentage change in Y minus percentage change in velocity.25. Using average rates of money growth and inflation in the United States over many decades, Friedman and Schwartz fou
21、nd that decades of high money growth tended to have _ rates of inflation and decades of low money growth tended to have _ rates of inflation.A) high; highB) high; lowC) low; lowD) low; high26. Using decade-long data across countries from 20002010, countries with high money growth tend to have _ infl
22、ation.A) highB) lowC) constantD) decreasing27. The right of seigniorage is the right to:A) levy taxes on the public.B) borrow money from the public.C) draft citizens into the armed forces.D) print money.28. “Inflation tax” means that:A) as the price level rises, taxpayers are pushed into higher tax
23、brackets.B) as the price level rises, the real value of money held by the public decreases.C) as taxes increase, the rate of inflation also increases.D) in a hyperinflation, the chief source of tax revenue is often the printing of money.29. The inflation tax is paid:A) only by the central bank.B) by
24、 all holders of money.C) only by government bond holders.D) equally by every household.30. The percentage of government revenue raised by printing money has usually accounted for:A) more than 10 percent of government revenue in the United States.B) less than 3 percent of government revenue in the Un
25、ited States.C) less than 3 percent of government revenue in Italy.D) less than 3 percent of government revenue in Greece.31. During the American Revolution, the price of gold measured in continental dollars increased to more than _ times its previous level.A) 2B) 10C) 50D) 10032. The real interest r
26、ate is equal to the:A) amount of interest that a lender actually receives when making a loan.B) nominal interest rate plus the inflation rate.C) nominal interest rate minus the inflation rate.D) nominal interest rate.33. If the nominal interest rate is 1 percent and the inflation rate is 5 percent,
27、the real interest rate is:A) 1 percent.B) 6 percent.C) 4 percent.D) 5 percent.34. If the real interest rate declines by 1 percent and the inflation rate increases by 2 percent, the nominal interest rate must:A) increase by 2 percent.B) increase by 1 percent.C) remain constant.D) decrease by 1 percen
28、t.35. If the real interest rate and real national income are constant, according to the quantity theory and the Fisher effect, a 1 percent increase in money growth will lead to rises in:A) inflation of 1 percent and the nominal interest rate of less than 1 percent.B) inflation of 1 percent and the n
29、ominal interest rate of 1 percent.C) inflation of 1 percent and the nominal interest rate of more than 1 percent.D) both inflation and the nominal interest rate of less than 1 percent.36. The one-to-one relation between the inflation rate and the nominal interest rate, the Fisher effect, assumes tha
30、t the:A) money supply is constant.B) velocity is constant.C) inflation rate is constant.D) real interest rate is constant.37. According to the quantity theory a 5 percent increase in money growth increases inflation by _ percent. According to the Fisher equation a 5 percent increase in the rate of i
31、nflation increases the nominal interest rate by _.A) 1; 5B) 5; 1C) 1; 1D) 5; 538. According to the quantity theory and the Fisher equation, if the money growth increases by 3 percent and the real interest rate equals 2 percent, then the nominal interest rate will increase:A) 2 percent.B) 3 percent.C
32、) 5 percent.D) 6 percent.39. In the classical model, according to the quantity theory and the Fisher equation, an increase in money growth increases:A) output.B) velocityC) the nominal interest rate.D) the real interest rate.40. Evidence from the past 40 years in the United States supports the Fishe
33、r effect and shows that when the inflation rate is high, the _ interest rate tends to be _.A) nominal; highB) nominal; lowC) real; highD) real; low41. The ex ante real interest rate is equal to the nominal interest rate:A) minus the inflation rate.B) plus the inflation rate.C) minus the expected inf
34、lation rate.D) plus the expected inflation rate.42. When a person purchases a 90-day Treasury bill, he or she cannot know the:A) ex post real interest rate.B) ex ante real interest rate.C) nominal interest rate.D) expected rate of inflation.43. Equilibrium in the market for goods and services determ
35、ines the _ interest rate and the expected rate of inflation determines the _ interest rate.A) ex ante real; ex ante nominalB) ex post real; ex post nominalC) ex ante nominal; ex post realD) ex post nominal; ex post real44. The ex ante real interest rate is based on _ inflation, while the ex post rea
36、l interest rate is based on _ inflation.A) expected; actualB) core; actualC) actual; expectedD) expected; core45. According to the Fisher effect, the nominal interest rate moves one-for-one with changes in the:A) inflation rate.B) expected inflation rate.C) ex ante real interest rate.D) ex post real
37、 interest rate.46. A positive relationship between nominal interest rates and inflation in the United States is obvious in:A) both recent data and nineteenth-century data.B) recent data but not nineteenth-century data.C) nineteenth-century data but not recent data.D) neither nineteenth-century data
38、nor recent data.47. The ex post real interest rate will be greater than the ex ante real interest rate when the:A) rate of inflation is increasing.B) rate of inflation is decreasing.C) actual rate of inflation is greater than the expected rate of inflation.D) actual rate of inflation is less than th
39、e expected rate of inflation.48. In recent U.S. experience, inflation has:A) been persistent from year to year, whereas in the nineteenth century inflation had little persistence.B) been persistent from year to year, and this was also true in the nineteenth century.C) not been persistent from year t
40、o year, although it was persistent in the nineteenth century.D) not been persistent from year to year, and the same was true in the nineteenth century.49. The opportunity cost of holding money is the:A) nominal interest rate.B) real interest rate.C) federal funds rate.D) prevailing Treasury bill rat
41、e.50. The real return on holding money is:A) the real interest rate.B) minus the real interest rate.C) the inflation rate.D) minus the inflation rate.51. If the real return on government bonds is 3 percent and the expected rate of inflation is 4 percent, then the cost of holding money is _ percent.A
42、) 1B) 3C) 4D) 752. The general demand function for real balances depends on the level of income and the:A) real interest rate.B) nominal interest rate.C) rate of inflation.D) price level.53. If the nominal interest increases, then:A) the money supply increases.B) the money supply decreases.C) the demand for money increases.D) the demand for money decreases.
