Ryan savedΓ’ΒΒ $50,000 last year in his bank account so that he could buy a car this year. In thisΓ’ΒΒ case, money served the function of aΓ’ΒΒ ________.
A.
means of deferred payment
B.
unit of account
C.
store of value
D.
medium of exchange
A bank is said to have enough liquidityΓ’ΒΒ if:
A.
it holds deposits amounting to at leastΓ’ΒΒ $100,000.
B.
it operates for seven days a week for more than 12 hours a day.
C.
it has enough funds to conduct its
dayminusΓ’ΒΒtominusΓ’ΒΒday
businesses and meet the regulatory requirements.
D.
the value of its assets exceeds the value of its liabilities by at leastΓ’ΒΒ $50,000.
Consider an economy that only produces wooden chairs. InΓ’ΒΒ 2012, the economy produced 100 wooden chairs priced atΓ’ΒΒ $10 each. The nominal GDP of the economy for the year 2012 willΓ’ΒΒ be:
A.
Γ’ΒΒ$10,000.
B.
Γ’ΒΒ$10.
C.
Γ’ΒΒ$100.
D.
Γ’ΒΒ$1,000.
Hyperinflationary episodes are always related to extremely rapid growthΓ’ΒΒ of:
A.
real GDP.
B.
money supply.
C.
interest rates.
D.
money demand.
Which of the following financial organizations have the ability to influence the supply of reserves in the UnitedΓ’ΒΒ States?
A.
The World Bank
B.
The Fed
C.
Only private commercial banks
D.
Only public sector banks
A retired worker receives a pension that is not indexed to inflation. Which of the following will happen if the rate of inflationΓ’ΒΒ rises?
A.
The retiree will be better off.
B.
TheΓ’ΒΒ retiree's purchasing power will fall.
C.
The shareholders of the firm in which he worked will lose.
D.
TheΓ’ΒΒ retiree's purchasing power will increase.
Assuming all elseΓ’ΒΒ equal, what is likely to happen to the demand curve for reserves in an economy if it goes through a period of rapidΓ’ΒΒ expansion?
A.
There will be a n upward movement along the demand curve for reserves.
B.
The demand curve for reserves will shift to the left.
C.
There will be a downward movement along the demand curve for reserves.
D.
The demand curve for reserves will shift to the right.
If the nominal interest rate in an economy isΓ’ΒΒ 9% and the expected inflation rate isΓ’ΒΒ 6%, then the expected real interest rate in the economyΓ’ΒΒ is:
A.
Γ’ΒΒ15%.
B.
Γ’ΒΒ9%.
C.
Γ’ΒΒ6%.
D.
Γ’ΒΒ3%.
If nominal GDPΓ’ΒΒ increases, what might be the cause of thisΓ’ΒΒ increase?
If nominal GDPΓ’ΒΒ increases, this could be causedΓ’ΒΒ by:
Γ’ΒΒ(Select
all that
apply.Γ’ΒΒ)
A.
An increase in the price level
B.
Deflation
C.
An increase in real GDP
D.
A decrease in the price level
Given the followingΓ’ΒΒ information, what is the growth rate of nominalΓ’ΒΒ GDP?
Upper Y 0Y0
real GDPΓ’ΒΒ =
Γ’ΒΒ$10001000
Γ’ΒΒ(in millions)
Upper Y 1Y1
real GDPΓ’ΒΒ =
Γ’ΒΒ$11001100
Γ’ΒΒ(in millions)
Upper Y 0Y0
price levelΓ’ΒΒ = 120120
Upper Y 1Y1
price levelΓ’ΒΒ = 130130The growth rate of nominal GDP is
nothing Γ’ΒΒ%.
Γ’ΒΒ (Round
your answer to the nearest
hundredth.Γ’ΒΒ)
According to the quantity theory ofΓ’ΒΒ money, what must the growth rate of the money supply be given the followingΓ’ΒΒ information?
The growth rate of real GDP is
1.01.0Γ’ΒΒ%.
The growth rate of nominal GDP is
3.83.8Γ’ΒΒ%.
The nominal interest rate is
7.17.1Γ’ΒΒ%.
The real interest rate is
4.34.3Γ’ΒΒ%.
The money supplyΓ’ΒΒ (M2) is
Γ’ΒΒ$10 comma 61210,612
Γ’ΒΒ(in billions)According to the quantity theory ofΓ’ΒΒ money, the growth rate of the money supply must be
nothing Γ’ΒΒ%.
Γ’ΒΒ (Round
your answer to the nearest
tenth.Γ’ΒΒ)
According to the quantity theory ofΓ’ΒΒ money, what is the inflationΓ’ΒΒ rate?
Use the information given above and calculate the inflation rate.
According to the quantity theory ofΓ’ΒΒ money, the inflation rate is
nothing Γ’ΒΒ%.
Γ’ΒΒ (Round
your answer to the nearest
tenth.Γ’ΒΒ)
According to the quantity theory ofΓ’ΒΒ money, the inflation rate is
A.
the ratio of money supply to nominal GDP.
B.
the gap between the growth rate of money supply and the growth rate of real GDP.
C.
the gap between the nominal and real interest rates.
D.
the gap between the growth rate of money supply and the growth rate of nominal GDP.
If the inflation rate is
positivepositiveΓ’ΒΒ,
what must beΓ’ΒΒ true?
A.
The growth rate of nominal GDP
greater than>
the growth rate of money supply.
B.
The growth rate of real GDP
less than<
the growth rate of money supply.
C.
The growth rate of real GDP
greater than>
the growth rate of money supply.
D.
The growth rate of nominal GDP
less than<
the growth rate of money supply.
An open market operation isΓ’ΒΒ ____________.
A.
the process of sellingΓ’ΒΒ Fed-issued IOUs between banks.
B.
an exchange between a private bank and the Federal Reserve where the Fed buys or sells government bonds to private banks.
C.
where a bank borrows reserves or bonds from the FederalΓ’ΒΒ Reserve's discount window.
D.
an exchange between private banks where the banks buy or sell bonds to each other.
The Federal Reserve conducts open market operations when it wants toΓ’ΒΒ ____________.
A.
change the liquidity levels of banks.
B.
influence the discount rate.
C.
influence the federal funds rate.
D.
change the level of reserves it holds for banks.
When the Fed
sellssells
government bonds
toto
privateΓ’ΒΒ banks, it
Γ’ΒΒΌ
the electronic reserves that banks hold.
