2026 TRU ECON 1951 - Principles of Macroeconomics tips (211 questions and
answers)
Correct
Incorrect
Your answers
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2 of 211
Term
What is the greatest drawback of the quantity theory of money?
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Explains how an increase in money Provides a detailed analysis of
supply reduces economic activity. interest rate effects on inflation.
No explanation of how an
increase in the money supply Describes the impact of fiscal policy
causes an increase in on economic growth.
economic activity.
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3 of 211
Term
What is the formula for the long-run annual rate of inflation?
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Long-run rate of price inflation
Long-run rate of price inflation =
= rate of growth of the money
rate of wage increase - rate of
productivity growth
, supply - rate of real income
growth
Long-run rate of price inflation = Long-run rate of price inflation =
rate of interest - rate of economic rate of economic growth - rate of
growth money supply
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4 of 211
Term
What is the M1 money supply defined as? What measures of money
are included in the M1 money supply?
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Currency held by the public (very liquid).
Traveler's checks, demand deposits, checkable deposits.
Belief that the monetary authorities should be replaced by a robot programmed
to increase the money supply at a low, constant rate.
Surplus - Demand of our dollars on the foreign exchange exceeds the supply
(Good)
Deficit - Supply of our dollars exceeds the demand (Bad)
"The" multiplier is used with government spending in the economy.
The money and income multipliers is used when government buys or sells
bonds. The money multiplier reflects the fractional banking system, where the
income multiplier is used afterwards.
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5 of 211
Term
According to a monetarist, what should you do to the money supply
to promote price stability?
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Increase the money supply to match Set the money supply equal to the
inflation. nominal rate of income growth.
Set the rate of growth of the
Decrease the money supply to
money supply equal to the
stabilize interest rates.
real rate of income growth.
Don't know?
6 of 211
Definition
The difference between exports and imports of G & S.
Apart of current account.
Sum of merchandise trade balance (difference of X and M of goods)
and services trade balance (difference of X and M of services)
Primary determinant of current account?
answers)
Correct
Incorrect
Your answers
, Don't know?
2 of 211
Term
What is the greatest drawback of the quantity theory of money?
Give this one a try later!
Explains how an increase in money Provides a detailed analysis of
supply reduces economic activity. interest rate effects on inflation.
No explanation of how an
increase in the money supply Describes the impact of fiscal policy
causes an increase in on economic growth.
economic activity.
Don't know?
3 of 211
Term
What is the formula for the long-run annual rate of inflation?
Give this one a try later!
Long-run rate of price inflation
Long-run rate of price inflation =
= rate of growth of the money
rate of wage increase - rate of
productivity growth
, supply - rate of real income
growth
Long-run rate of price inflation = Long-run rate of price inflation =
rate of interest - rate of economic rate of economic growth - rate of
growth money supply
Don't know?
4 of 211
Term
What is the M1 money supply defined as? What measures of money
are included in the M1 money supply?
Give this one a try later!
Currency held by the public (very liquid).
Traveler's checks, demand deposits, checkable deposits.
Belief that the monetary authorities should be replaced by a robot programmed
to increase the money supply at a low, constant rate.
Surplus - Demand of our dollars on the foreign exchange exceeds the supply
(Good)
Deficit - Supply of our dollars exceeds the demand (Bad)
"The" multiplier is used with government spending in the economy.
The money and income multipliers is used when government buys or sells
bonds. The money multiplier reflects the fractional banking system, where the
income multiplier is used afterwards.
, Don't know?
5 of 211
Term
According to a monetarist, what should you do to the money supply
to promote price stability?
Give this one a try later!
Increase the money supply to match Set the money supply equal to the
inflation. nominal rate of income growth.
Set the rate of growth of the
Decrease the money supply to
money supply equal to the
stabilize interest rates.
real rate of income growth.
Don't know?
6 of 211
Definition
The difference between exports and imports of G & S.
Apart of current account.
Sum of merchandise trade balance (difference of X and M of goods)
and services trade balance (difference of X and M of services)
Primary determinant of current account?
