plugin-PS_4 - Any typo or mistake is on me. Any questions,...

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Any typo or mistake is on me. Any questions, email me. xgu@econ.rutgers.edu Econ 103: Sec.05 Problem Set #4: Due on Tuesday 7 th December 2010 Note: 1. Do it LOL. Do it independently . Do it carefully. 2. Write your answer on the answer sheet attached. I only collect answer sheets on Tuesdays. 3. Good Luck! 4. The grading of this problem set is like mid-term grading. Total is 31 questions, but only 30 questions are counted . 1. Other things the same, an increase in velocity means that a. the rate at which money changes hands falls, so the price level rises. b. the rate at which money changes hands falls, so the price level falls. c. the rate at which money changes hands rises, so the price level rises. d. the rate at which money changes hands rises, so the price level falls. 2. If the nominal interest rate is 8 percent and expected inflation is 3.5 percent, then what is the real interest rate? a. 11.5 percent b. 7.5 percent c. 4.5 percent d. 2.5 percent 3. When the money market is drawn with the value of money on the vertical axis, an increase in the money supply a. increases the price level and increases the value of money. b. increases the price level and decreases the value of money. c. decreases the price level and increases the value of money. d. decreases the price level and decreases the value of money. 4. Open-market purchases by the Fed make the money supply a. increase, which makes the value of money increase. b. increase, which makes the value of money decrease. c. decrease, which makes the value of money decrease. d. decrease, which makes the value of money increase. Figure 12-1
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Any typo or mistake is on me. Any questions, email me. xgu@econ.rutgers.edu 5. Refer to Figure 12-1 . If the money supply is MS 2 and the value of money is 2, then a. the value of money is lower than its equilibrium level. b. the price level is higher than its equilibrium level. c. the quantity of money demanded is greater than the quantity of money supplied. d. the quantity of money supplied is greater than the quantity of money demanded. 6. Refer to Figure 12-1 . If the money supply is MS 2 and the value of money is 2, then there is an excess a. demand for money that is represented by the distance between points A and C. b. demand for money that is represented by the distance between points A and B. c.
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plugin-PS_4 - Any typo or mistake is on me. Any questions,...

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