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Chapter 13 Quiz

Chapter 13 Quiz - The income effect is the increase in the...

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Chapter 13 Quiz In the equation of exchange, the money supply multiplied by velocity equals- GDP Monetarists can be described as a group of macroeconomists who- emphasize the importance of the money  supply as a determinant of macroeconomic activity one-shot inflation is a single increase in the price level and continued inflation is a sustained increase in the price  level The chief difference between one-shot inflation and continued inflation is that- one-shot inflation is a single  increase in the price level and continued inflation is a sustained increase in the price level The simple quantity theory of money predicts that changes in- the money supply lead to strictly proportional  changes in the price level. Suppose the Fed buys government securities from the public. The liquidity effect of this is that the real interest rate  will __________ and the nominal interest rate will __________.- not change; not change
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Unformatted text preview: The income effect is the- increase in the real and nominal interest rates caused by an increase in GDP In the equation of exchange, the average number of times a dollar is used to purchase a final good or service is the __________ of money- Velocity Suppose the economy starts off producing Natural Real GDP. Next, aggregate demand rises, ceteris paribus. As a result, the price level rises in the short run. In the long run, when the economy has moved back to producing Natural Real GDP, the price level will be- higher than it was in short-run equilibrium MV in the equation of exchange is also defined as- total expenditures Which of the following statements is true- Nominal interest rate = real interest rate + expected inflation rate...
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