In the 1970s in response to recessions caused by an

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10. In the 1970s in response to recessions caused by an increase in the price of oil, the central banks in many countries increased the money supply. How might the central banks have done this? a. by selling bonds on the open market, which would have raised the value of money b. by purchasing bonds on the open market, which would have raised the value of money c. by selling bonds on the open market, which would have raised the value of money d. by purchasing bonds on the open market, which would have lowered the value of money 11. Which of the following terms refers to economic variables whose values are measured in monetary units? a. dichotomous variables b. nominal variables c. classical variables d. real variables 78
Junjie Liu – Econ 105 Practice Multiple Choice 12. Randy pays $120 for a bag of goods he purchases at the HyValu discount store. Which of the following accurately identifies the types of the variables involved? a. The $120 is a real variable; the bag of groceries is a nominal variable. b. The $120 is a nominal variable; the bag of groceries is a real variable. c. Both the $120 and the bag of groceries are nominal variables. d. Both the $120 and the bag of groceries are real variables. 13. What type of variable is the price level? a. a relative variable b. an actual variable c. a real variable d. a nominal variable 14. Your boss gives you an increase in the number of dollars you earn per hour. How does this change your nominal and real wages? a. This increase in pay makes your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage also increased. b. This increase in pay makes your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage decreased. c. This increase in pay makes your real wage increase. If your real wage rose by a greater percentage than the price level, then your nominal wage also increased. d. This increase in pay makes your real wage decrease. If your real wage rose by a greater percentage than the price level, then your nominal wage decreased. 15. Which of the following ideas does the classical dichotomy refers to? a. The supply of money is irrelevant for understanding the determinants of nominal and real variables. b. The supply of money determines nominal variables, but not real variables. c. The supply of money determines real variables, but not nominal variables. d. The supply of money is a determinant of both real and nominal variables.

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