Question 1

Conducting expansionary monetary policy when the economy is at its long-run equilibrium causes the Phillips Curve:

Accepted Answer

A)  to shift straight up.
B)  to shift straight down.
C)  to become less steep.
D)  to become more steep.E) A) and D)
F) C) and D)

Question 2

Core inflation is:

Accepted Answer

A)  a measure of inflation using the CPI.
B)  a measure of inflation that excludes goods with historically volatile price changes.
C)  the BLS's official measure of changes in prices.
D)  All of these statements are true.E) A) and D)
F) A) and B)

Question 3

The total amount of output a country could reasonably produce if all of its people and capital resources were fully engaged is called:

Accepted Answer

A)  potential output.
B)  full output.
C)  positive output gap.
D)  economic growth.E) B) and C)
F) A) and B)

Question 4

Demand pull inflation occurs when:

Accepted Answer

A)  the price of a key input increases suddenly.
B)  the price level changes in response to changes in the business cycle.
C)  the price of necessity goods increases suddenly.
D)  the business cycle becomes sporadic and unpredictable.E) A) and D)
F) All of the above

Question 5

The short-run Phillips Curve is _________,and the long-run Phillips Curve is ________.

Accepted Answer

A)  downward sloping;vertical
B)  downward sloping;horizontal
C)  upward sloping;vertical
D)  upward sloping;horizontalE) A) and D)
F) All of the above

Question 6

When the prices of food and gasoline are added to core inflation,we get:

Accepted Answer

A)  core deflation.
B)  headline inflation.
C)  the CPI Index.
D)  adjusted inflation.E) A) and B)
F) B) and D)

Question 7

If the Fed were to push unemployment below NAIRU,it is likely that:

Accepted Answer

A)  inflation will get out of control.
B)  deflation will send the economy into a deflationary spiral.
C)  the dual mandate will be met.
D)  All of these statements are true.E) A) and B)
F) C) and D)

Question 8

If the nominal interest rate is the same as the real interest rate,then inflation must be:

Accepted Answer

A)  zero.
B)  higher than the nominal rate of interest.
C)  lower than the nominal rate of interest.
D)  negative.E) A) and B)
F) A) and C)

Question 9

The quantity theory of money relies on which variable to remain constant?

Accepted Answer

A)  Velocity of money
B)  Money supply
C)  Price level
D)  None of these is held constant.E) None of the above
F) A) and D)

Question 10

If the nominal interest rate is higher than the inflation rate,the value of your savings:

Accepted Answer

A)  will increase.
B)  will decrease.
C)  should remain about the same.
D)  Cannot say without knowing the beginning balance of savings.E) A) and C)
F) B) and C)

Question 11

If an economy produces 3,000 units of output with a price level of $2 and the money supply (M) is $2,000,velocity is:

Accepted Answer

A)  2.
B)  3.
C)  67.
D)  150.E) C) and D)
F) None of the above

Question 12

Headline inflation:

Accepted Answer

A)  includes all of the goods the average consumer buys.
B)  is based on the CPI basket of goods.
C)  is measured using core inflation with the prices of food and gasoline added in.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 13

When the Fed conducts expansionary monetary policy,it __________ in the short run,but __________ in the long run.

Accepted Answer

A)  boosts demand;causes inflation
B)  causes inflation;boosts output
C)  causes inflation;boosts economic growth
D)  boosts demand;boosts supplyE) B) and D)
F) B) and C)

Question 14

The velocity of money is:

Accepted Answer

A)  the number of transactions a typical dollar is used in during a given period.
B)  the number of goods a typical dollar can buy in a given period.
C)  how quickly money is created through the financial system.
D)  None of these statements is true.E) None of the above
F) A) and B)

Question 15

If an economy produces 1,000 units of output with a price level of $5 and the money supply (M) is $1,000,velocity is:

Accepted Answer

A)  5.
B)  200.
C)  50.
D)  2.E) None of the above
F) B) and C)

Question 16

Cost pull inflation occurs when:

Accepted Answer

A)  the price of a key input increases suddenly.
B)  the price level changes in response to changes in the business cycle.
C)  the price of necessity goods increases suddenly.
D)  the business cycle becomes sporadic and unpredictable.E) A) and C)
F) C) and D)

Question 17

Being penalized via taxes for making more money in dollars even though your purchasing power hasn't changed at all is called:

Accepted Answer

A)  tax distortion.
B)  shoe-leather costs.
C)  menu costs.
D)  the velocity of inflation.E) None of the above
F) A) and D)

Question 18

The NAIRU:

Accepted Answer

A)  is difficult to measure.
B)  can change over time.
C)  occurs at the economy's level of potential output.
D)  All of these statements are true.E) None of the above
F) B) and C)

Question 19

The real interest rate is:

Accepted Answer

A)  adjusted for inflation.
B)  the reported interest rate,not adjusted for inflation.
C)  the interest rate paid to savers.
D)  the interest rate charged to borrowers.E) A) and B)
F) A) and C)

Question 20

If an economy has a money supply of $200,a velocity of 12,and a price level of $2,the output level must be:

Accepted Answer

A)  1,200 units.
B)  2,400 units.
C)  600 units.
D)  6,000 units.E) B) and C)
F) A) and B)

Exam 32: Inflation

Being penalized via taxes for making more money in dollars even though your purchasing power hasn't changed at all is called:

Correct AnswerverifiedShow Answer

Conducting expansionary monetary policy when the economy is at its long-run equilibrium causes the Phillips Curve:

Correct AnswerverifiedShow Answer

If an economy has a money supply of $200,a velocity of 12,and a price level of $2,the output level must be:

Correct AnswerverifiedShow Answer

The short-run Phillips Curve is _________,and the long-run Phillips Curve is ________.

Correct AnswerverifiedShow Answer

The NAIRU:

Correct AnswerverifiedShow Answer

If an economy produces 3,000 units of output with a price level of $2 and the money supply (M) is $2,000,velocity is:

Correct AnswerverifiedShow Answer

The quantity theory of money relies on which variable to remain constant?

Correct AnswerverifiedShow Answer

When the prices of food and gasoline are added to core inflation,we get:

Correct AnswerverifiedShow Answer

The real interest rate is:

Correct AnswerverifiedShow Answer

The velocity of money is:

Correct AnswerverifiedShow Answer

Core inflation is:

Correct AnswerverifiedShow Answer

When the Fed conducts expansionary monetary policy,it __________ in the short run,but __________ in the long run.

Correct AnswerverifiedShow Answer

If the nominal interest rate is the same as the real interest rate,then inflation must be:

Correct AnswerverifiedShow Answer

Demand pull inflation occurs when:

Correct AnswerverifiedShow Answer

If the Fed were to push unemployment below NAIRU,it is likely that:

Correct AnswerverifiedShow Answer

Headline inflation:

Correct AnswerverifiedShow Answer

The total amount of output a country could reasonably produce if all of its people and capital resources were fully engaged is called:

Correct AnswerverifiedShow Answer

If the nominal interest rate is higher than the inflation rate,the value of your savings:

Correct AnswerverifiedShow Answer

If an economy produces 1,000 units of output with a price level of $5 and the money supply (M) is $1,000,velocity is:

Correct AnswerverifiedShow Answer

Cost pull inflation occurs when:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The short-run Phillips Curve is _,and the long-run Phillips Curve is .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When the Fed conducts expansionary monetary policy,it in the short run,but in the long run.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified