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6.As the result of unanticipated inflation, borrowers are better off while lenders are worse off if the actual inflation rate
Select one:
a. exceeds the expected inflation rate.
b. is equal to the expected inflation rate.
c. is less than the expected inflation rate.
d. Neither borrowers nor lenders are better off as the result of unanticipated inflation.

7.In the short run, decreases in the money supply will
Select one:
a. decrease real interest rates.
b. increase real interest rates.
c. may increase or decrease real interest rates.
d. have no effect on real interest rates.

8.What would happen to prices if, for example, all trade unions negotiated long-term higher nominal pay and regular across-the-board increases for workers?
Select one:
a. Prices would remain unchanged.
b. Prices would likely increase.
c. Prices are not affected by nominal salary increases.
d. Prices would likely decrease.

9.As the result of unanticipated inflation, workers are better off while firms are worse off if the actual inflation rate
Select one:
a. is equal to the expected inflation rate.
b. exceeds the expected inflation rate.
c. is less than the expected inflation rate.
d. Neither firms nor workers are better off as the result of unanticipated inflation.

10.If the velocity of money is 4 and nominal GDP is $24 trillion, then the money supply is
Select one:
a. $28 trillion.
b. $20 trillion.
c. $6 trillion.
d. $0.167 trillion.

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Kritika Krishnakumar
Kritika KrishnakumarLv10
28 Sep 2019
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Related questions

11.Suppose that for a given year money growth is 10 percent, real GDP growth is 8 percent, and velocity is constant. According to the growth version of the quantity equation, the inflation rate would be
Select one:
a. -2 percent.
b. 1.25 percent.
c. 2 percent.
d. 18 percent.

12.An inflation rate greater than 50 percent per month is known as
Select one:
a. disinflation.
b. stagflation.
c. deflation.
d. hyperinflation.

13.If nominal wages increase by 5 percent while real wages fall by 1 percent, the inflation rate must be
Select one:
a. 1 percent.
b. 4 percent.
c. 5 percent.
d. 6 percent.

14.When the expected rate of inflation is added to the real interest rate, the result is called the
Select one:
a. preferred rate.
b. nominal interest rate.
c. adjustment rate.
d. differential rate.

15.When a government has a budget deficit and has reduced its spending, what other step can be taken to generate more revenue, besides issuing government bonds?
Select one:
a. reduce unemployment
b. raise interest rates
c. increasing exports
d. raise taxes

1. According to the principle of monetary neutrality:

a. Changes in the money supply do not affect real variables.

b. Real variables do not affect nominal variables.

c. Nominal variables are not adjusted for inflation and real units are adjusted for inflation.

d. Nominal variables are expressed in monetary units and real variables are expressed in physical units.

2. The velocity of money is:

a. The speed at which the money multiplier works.

b. The speed at which prices rise in the economy.

c. The time it takes for checks to be cleared by the Fed.

d. The rate at which money changes hands.

3. If the Fed increased the supply of money, and velocity remains unchanged, according to the quantity equation:

a. P x Y must decrease.

b. Y must decrease.

c. P x Y must increase.

d. Y must increase.

4. When inflation turns out to be higher than expected, borrowers will be ________ off, and lenders will be ________ off.

a. Better, better

b. Better, worse

c. Worse, worse

d. Worse, better

5. Suppose the value of goods and services produced in an economy is $10 billion, but the total money supply is $1 billion, what is the velocity of money?

a. 0

b. 1

c.5

d. 10

6. The quantity theory of money states that:

a. All else equal an increase in money growth will lead to a proportionate increase in prices in the long-run.

b. All else equal an increase in money growth will lead to a proportionate increase in prices in the short-run.

c. An increase in money growth can lead to inflation if and only if velocity is constant.

d. An increase in money growth must lead to a decrease in velocity.

7. In a country with hyperinflation, the value of money

a. Is increasing over time.

b. Is decreasing quickly over time.

c. Is remaining constant.

d. May either be increasing or decreasing.

QUESTION 11

If the demand for investment loans rises, this could be the result of

the discovery of new and better roundabout methods of production.

a lower rate of time preference in society.

a lower interest rate.

a higher interest rate.

a and c

1 points

QUESTION 12

Which of the following statements is true?

All persons have a high rate of time preference.

People with a high rate of time preference are more likely to be borrowers than people with a low rate of time preference.

People with a high rate of time preference are more likely to be lenders than people with a low rate of time preference.

A high interest rate is the cause of a high rate of time preference.

none of the above

1 points

QUESTION 13

Which of the following statements is true?

The nominal interest rate is always higher than the real interest rate since the nominal interest rate equals the real interest rate plus the expected inflation rate.

The nominal interest rate is always lower than the real interest rate since the nominal interest rate equals the real interest rate minus the expected inflation rate.

The nominal interest rate can equal the real interest rate, but to do so the expected inflation rate must be zero percent.

It is the nominal interest rate-not the real interest rate-that matters to borrowers.

1 points

QUESTION 14

If there is an increase in the expected inflation rate, then,

the supply and demand for loanable funds will decrease.

the supply and demand for loanable funds will increase.

the supply of loanable funds will decrease, and the demand for loanable funds will increase.

the supply of loanable funds will increase, and the demand for loanable funds will decrease.

1 points

QUESTION 15

If suddenly a 4 percent inflation rate (instead of a zero percent inflation rate) is expected by both suppliers and demanders in the loanable funds market, then

the demand for loanable funds curve will shift rightward, and the supply of loanable funds curve will shift leftward.

the demand for loanable funds curve will shift leftward, and the supply of loanable funds curve will shift rightward.

both the demand for loanable funds curve and the supply of loanable funds curve will shift leftward.

both the demand for loanable funds curve and the supply of loanable funds curve will shift rightward.

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