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Chapter12(Practicequestion)

Chapter12(Practicequestion) - Chapter 12-Money Growth and...

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Chapter 12—Money Growth and Inflation 1. Which of the following concerning the history of inflation is false? a. Prices rose at an average annual rate of about 4 percent over the last 60 years. b. There was about an 12-fold increase in the price level over the last 60 years. c. Inflation in the 1970s was below the average over the last 60 years. d. Canada has experienced periods of deflation. 2. Economists all agree that a. neither high inflation nor moderate inflation is very costly. b. both high and moderate inflation are quite costly. c. high inflation is costly, but disagree about the costs of moderate inflation. d. moderate inflation is as costly as high inflation. 3. When the number of dollars needed to buy a representative basket of goods falls, the value of money 4. When the money market is drawn with the value of money on the vertical axis, an increase in the price level causes a 5. Which of the following is correct? 6. When the money market is drawn with the value of money on the vertical axis, the price level decreases if a. either money demand or money supply shifts right. b. either money demand or money supply shifts left. c. money demand shifts right or money supply shifts left. d. money demand shifts left or money supply shifts right. 7. When the money market is drawn with the value of money on the vertical axis, if the price level is above the equilibrium level, there is a
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