CHAPTER 30 - Chapter30 Money Growth andInflation 1....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 30 Money Growth  and Inflation 1. The price level that equates the quantity of money demanded  with the quantity of money supplied   is called the a. equilibrium  price level. b. natural price level. c. relative price level. d. commodity  price level. ANSWER: a equilibrium  price level. SECTION: 1 OBJECTIVE:1 2. Real economic variables measure a. value in the prices of some certain base year. b. value in the prices of the current year. c. nominal values adjusted  for the current interest rate. d. nominal values adjusted  for the current money supply. ANSWER: a value in the prices of some certain base year. SECTION: 1 OBJECTIVE:1 3. According  to the equation  of exchange, money times velocity equals a. nominal GDP. b. real GDP. c. inflation-adjusted  total output  in the economy. d. the number  of times each unit of money is spent on goods and  services. ANSWER: a nominal GDP. SECTION: 1 OBJECTIVE: 1 4. If real output  in an economy  is 1000 goods per year, the money supply  is $300, and  each dollar is  spent 3 times per year, then the average price of goods is a. $0.90. b. $1.11. c. $1.50. d. $1.33. ANSWER: a $0.90. SECTION: 1 OBJECTIVE:1 5. Within the context of the equation  of exchange, the higher the equilibrium  price level is  a. the higher is the nominal money supply. b. the lower is the nominal interest rate. c. the higher is real GDP. d. the lower is velocity. ANSWER: a the higher is the nominal money supply. SECTION: 1 OBJECTIVE:1 177
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
178    Chapter 30/Money Growth and Inflation 6. If real GDP falls and  the nominal interest rate rises, then the equilibrium  price level a. must fall. b. must rise. c. will fall if the effect of the decline in real GDP dominates. d. will fall if the effect of the increase in the nominal interest rate dominates. ANSWER: b must rise. SECTION: 1 OBJECTIVE:1 7. If the supply  of money is greater than  the amount  of money people want  to hold, then a. spending  will increase and  the price level will fall. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

Page1 / 5

CHAPTER 30 - Chapter30 Money Growth andInflation 1....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online