Question 1
0 out of 1 points
Other things remaining the same, if the quantity of money increases by a given percentage,
then in the long run the ________ by the same percentage.
Selected Answer:
price level falls
Answers: price level falls
real interest rate falls
real interest rate rises
price level rises
nominal interest rate falls
Question 2
0 out of 1 points
When the Fed fears inflation, the Fed ________ government securities, so that the federal
funds rate ________ and the quantity of money ________.
Selected Answer:
buys; rises; decreases
Answers: sells; falls; increases
buys; falls; increases
buys; rises; decreases
sells; falls; decreases
sells; rises; decreases
Question 3
0 out of 1 points
In the short run, lowering the federal funds rate shifts the aggregate demand curve ________
so that real GDP ________ and the price level ________.
Selected Answer:
leftward; decreases; rises
Answers: leftward; decreases; rises
rightward; decreases; rises
leftward; decreases; falls
rightward; increases; rises
rightward; increases; falls
, Question 4
1 out of 1 points
The equation of exchange shows that
Selected Answer:
P = (M × V) ÷ Y.
Answers: P = (M ÷ V) × Y.
P = (V × M) × Y.
P - Y = M + V.
P = (M × V) ÷ Y.
P = (M × Y) ÷ V.
Question 5
1 out of 1 points
If the Fed sells U.S. government securities to banks, the federal funds rate ________ and
banks' reserves ________.
Selected Answer:
rises; decrease
Answers: falls; decrease
rises; decrease
falls; increase
rises; increase
rises; do not change
Question 6
1 out of 1 points
If the Fed raises the federal funds rate, eventually the
Selected Answer:
AD curve shifts leftward and real GDP decreases.
Answers: AS curve shifts leftward and real GDP decreases.
AD curve shifts rightward and real GDP decreases.
AS curve shifts rightward and real GDP increases.
AD curve shifts leftward and real GDP decreases.
AD curve shifts rightward and real GDP increases.
Question 7
0 out of 1 points
The Fed is a central bank and as such
, Selected Answer:
does business with international organizations such as the United Nations.
Answers: does business with international organizations such as the United Nations.
provides banking services to individuals and firms.
is where the Federal Government turns when it needs to borrow.
provides banking services to banks but not individuals.
does business only with the federal government.
Question 8
0 out of 1 points
An open market purchase of securities by the Fed leads to all of the following EXCEPT
Selected Answer:
an increase in bank lending.
Answers: an initial increase in excess reserves.
an increase in the monetary base.
an increase in banks' reserves.
an increase in bank lending.
a decrease in the quantity of money.
Question 9
0 out of 1 points
Other things remaining the same, in the long run ________ in the quantity of money brings
an equal percentage ________.
Selected Answer:
a decrease; increase in the nominal interest rate
Answers: a decrease; increase in the nominal interest rate
a decrease; increase in the price level
an increase; decrease in the price level
an increase; increase in the real interest rate
a decrease; decrease in the price level
Question 10
1 out of 1 points
Becky holds $30,000 as money. After a year during which inflation was 5 percent a year, the
inflation tax over that year was
, Selected Answer:
$1,500.
Answers: $3,000.
$1,500.
$1,000.
$500.
$5.
Question 11
1 out of 1 points
According to the equation of exchange, if the quantity of money is $4 billion and the velocity
of circulation is 3, nominal GDP is
Selected Answer:
$12 billion.
Answers: $0.75 billion.
$1.3 billion.
$7 billion.
$8 billion.
$12 billion.
Question 12
0 out of 1 points
A common trait of money through history and across cultures is that money
Selected Answer:
was always based on gold or some other precious commodity.
Answers: always had mystical properties.
was always fiat money.
was always based on gold or some other precious commodity.
was always issued by the local government.
was always generally accepted as a means of payment.
Question 13
0 out of 1 points
Control of monetary policy rests with
Selected Answer:
0 out of 1 points
Other things remaining the same, if the quantity of money increases by a given percentage,
then in the long run the ________ by the same percentage.
Selected Answer:
price level falls
Answers: price level falls
real interest rate falls
real interest rate rises
price level rises
nominal interest rate falls
Question 2
0 out of 1 points
When the Fed fears inflation, the Fed ________ government securities, so that the federal
funds rate ________ and the quantity of money ________.
Selected Answer:
buys; rises; decreases
Answers: sells; falls; increases
buys; falls; increases
buys; rises; decreases
sells; falls; decreases
sells; rises; decreases
Question 3
0 out of 1 points
In the short run, lowering the federal funds rate shifts the aggregate demand curve ________
so that real GDP ________ and the price level ________.
Selected Answer:
leftward; decreases; rises
Answers: leftward; decreases; rises
rightward; decreases; rises
leftward; decreases; falls
rightward; increases; rises
rightward; increases; falls
, Question 4
1 out of 1 points
The equation of exchange shows that
Selected Answer:
P = (M × V) ÷ Y.
Answers: P = (M ÷ V) × Y.
P = (V × M) × Y.
P - Y = M + V.
P = (M × V) ÷ Y.
P = (M × Y) ÷ V.
Question 5
1 out of 1 points
If the Fed sells U.S. government securities to banks, the federal funds rate ________ and
banks' reserves ________.
Selected Answer:
rises; decrease
Answers: falls; decrease
rises; decrease
falls; increase
rises; increase
rises; do not change
Question 6
1 out of 1 points
If the Fed raises the federal funds rate, eventually the
Selected Answer:
AD curve shifts leftward and real GDP decreases.
Answers: AS curve shifts leftward and real GDP decreases.
AD curve shifts rightward and real GDP decreases.
AS curve shifts rightward and real GDP increases.
AD curve shifts leftward and real GDP decreases.
AD curve shifts rightward and real GDP increases.
Question 7
0 out of 1 points
The Fed is a central bank and as such
, Selected Answer:
does business with international organizations such as the United Nations.
Answers: does business with international organizations such as the United Nations.
provides banking services to individuals and firms.
is where the Federal Government turns when it needs to borrow.
provides banking services to banks but not individuals.
does business only with the federal government.
Question 8
0 out of 1 points
An open market purchase of securities by the Fed leads to all of the following EXCEPT
Selected Answer:
an increase in bank lending.
Answers: an initial increase in excess reserves.
an increase in the monetary base.
an increase in banks' reserves.
an increase in bank lending.
a decrease in the quantity of money.
Question 9
0 out of 1 points
Other things remaining the same, in the long run ________ in the quantity of money brings
an equal percentage ________.
Selected Answer:
a decrease; increase in the nominal interest rate
Answers: a decrease; increase in the nominal interest rate
a decrease; increase in the price level
an increase; decrease in the price level
an increase; increase in the real interest rate
a decrease; decrease in the price level
Question 10
1 out of 1 points
Becky holds $30,000 as money. After a year during which inflation was 5 percent a year, the
inflation tax over that year was
, Selected Answer:
$1,500.
Answers: $3,000.
$1,500.
$1,000.
$500.
$5.
Question 11
1 out of 1 points
According to the equation of exchange, if the quantity of money is $4 billion and the velocity
of circulation is 3, nominal GDP is
Selected Answer:
$12 billion.
Answers: $0.75 billion.
$1.3 billion.
$7 billion.
$8 billion.
$12 billion.
Question 12
0 out of 1 points
A common trait of money through history and across cultures is that money
Selected Answer:
was always based on gold or some other precious commodity.
Answers: always had mystical properties.
was always fiat money.
was always based on gold or some other precious commodity.
was always issued by the local government.
was always generally accepted as a means of payment.
Question 13
0 out of 1 points
Control of monetary policy rests with
Selected Answer:
