Econ(Money and banking ) below are the 50 question needed.

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Econ(Money and banking ) below are the 50 question needed.

Question 12 ptsA decrease in the price level will lead to 

A decrease in the price level will lead to

	an increase in the real interest rate and an increase in net exports.
	an increase in the real interest rate and a decrease in net exports.

	a decrease in the real interest rate and a decrease in net exports.
	a decrease in the real interest rate and an increase in net exports.

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Question 22 ptsA monopolistically competitive market differs from a perfectly competitive market in that a monopolistically competitive market has 

A monopolistically competitive market differs from a perfectly competitive market in that a monopolistically competitive market has

	more sellers.
	products that are identical.

	firms that are price setters.
	less sticky prices.

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Question 32 ptsWhich of the following would shift the aggregate demand curve to the left? 

Which of the following would shift the aggregate demand curve to the left?

	A cut in federal income taxes
	An increase in money demand

	An increase in the price level
	An increase in the money supply

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Question 42 ptsWhich of the following would NOT shift the aggregate demand curve to the left? 

Which of the following would NOT shift the aggregate demand curve to the left?

	An increase in money demand
	A decrease in consumption spending

	An increase in the money supply
	A cut in federal government spending

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Question 52 ptsIn the mid 1990s, monthly inflation in Yugoslavia peaked at 

In the mid 1990s, monthly inflation in Yugoslavia peaked at

	300,000%.
	30%.

	313,000,000%.
	300%.

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Question 62 ptsAn important difference between Keynes's approach to the demand for money and Friedman's approach is that 

An important difference between Keynes's approach to the demand for money and Friedman's approach is that

	in Friedman's theory, money demand responds only slightly to short-run fluctuations in income.
	in Keynes's theory, money demand is a function of the real interest rate, rather than the nominal interest rate.

	there is no role for the opportunity cost of holding money in Friedman's theory.
	in Keynes's theory, changes in output have no effect on the demand for money.

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Question 72 ptsKeynes assumed that the expected return on bonds is determined by 

Keynes assumed that the expected return on bonds is determined by

	the expected inflation rate adjusted for expectations of capital gains or losses on the bond.
	the interest rate on the bond adjusted for expectations of capital gains or losses on the bond.

	the interest rate on the bond adjusted for the expected inflation rate.
	the interest rate on the bond.

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Question 82 ptsInflation that is higher than expected redistributes wealth from 

Inflation that is higher than expected redistributes wealth from

	borrowers to lenders.
	the federal government to taxpayers.

	employers to employees under nominal wage contracts.
	lenders to borrowers.

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Question 92 ptsAccording to the real business cycle model, changes in the money supply will affect economic activity 

According to the real business cycle model, changes in the money supply will affect economic activity

	in neither the short run nor the long run.
	in both the short run and the long run.

	in the long run, but not the short run.
	in the short run, but not the long run.

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Question 102 ptsIn the new Keynesian view, which of the following expressions correctly states the relationship between the price that an individual firm with sticky prices charges and the aggregate price level?

In the new Keynesian view, which of the following expressions correctly states the relationship between the price that an individual firm with sticky prices charges and the aggregate price level?

	Pe = p + b(Ye - Y e)
	p = Pe + b(Ye - Y e)

	p = Pe + b(Y e - Ye)
	p = Pe + b(Ye + Y e)

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Question 112 ptsAccording to new Keynesians, which of the following is NOT an important source of price stickiness? 

According to new Keynesians, which of the following is NOT an important source of price stickiness?

	Long-term nominal price contracts
	Imperfect competition among sellers in the goods market

	Long-term nominal wage contracts
	Government wage and price controls

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Question 122 ptsGovernment budget deficits can be inflationary in the long run only if they 

Government budget deficits can be inflationary in the long run only if they

	occur as a result of large cuts in the personal income tax rate.
	cause a leftward shift in the SRAS curve.

	occur as a result of large increases in defense spending.
	are accompanied by rapid growth in the monetary base.

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Question 132 ptsEconomists who back the use of rules by the Fed believe that they would result in 

Economists who back the use of rules by the Fed believe that they would result in

	lower growth rates of aggregate supply.
	increased credibility for Fed actions.

	a lower government budget deficit.
	the eventual adoption of price controls.

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Question 142 ptsThe reason that the U.S. economy has experienced long-term inflation since World War II is 

The reason that the U.S. economy has experienced long-term inflation since World War II is

	the rate of growth of the money supply has been too fast relative to the rates of growth of velocity and output.
	the large budget deficits run by the federal government.

	the long-run increases in the prices of oil and other basic commodities.
	the high tax rates imposed by the federal government.

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Question 152 ptsDemand-pull inflation results from 

Demand-pull inflation results from

	attempts by the public to receive higher after-tax returns on their savings.
	policymakers' attempts to increase aggregate demand for current output above the full-employment level.

	attempts by financial markets to deal with bracket creep.
	workers' pressure for higher wages.

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Question 162 ptsThe Federal Reserve pursued an expansionary monetary policy during 1964 in order to 

The Federal Reserve pursued an expansionary monetary policy during 1964 in order to

	counteract the effects of a deep cut in federal income taxes.
	keep interest rates from rising.

	bring down the inflation rate.
	pull the United States out of a deep recession.

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Question 172 ptsMilton Friedman and Anna Schwartz believe that money's impact on output appears 

Milton Friedman and Anna Schwartz believe that money's impact on output appears

	only in the very short run.
	with a long and variable lag.

	only in the very long run.
	within a few months.

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Question 182 ptsIf the quantity of money is $4 trillion and nominal GDP is $8 trillion, velocity is 

If the quantity of money is $4 trillion and nominal GDP is $8 trillion, velocity is

	0.5.
	$32 trillion.

	not computable unless the value of the price level is given.
	2.

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Question 192 ptsThe key reason that expected inflation can distort financial decisions is that 

The key reason that expected inflation can distort financial decisions is that

	expected inflation results in substantial menu costs.
	lenders pay taxes on nominal rather than real returns.

	expected inflation reduces the real value of the national debt.
	lenders have an easier time calculating expected inflation than do borrowers.

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Question 202 ptsWhat action did Milosevic take that led to hyperinflation in Yugoslavia in the mid 1990s? 

What action did Milosevic take that led to hyperinflation in Yugoslavia in the mid 1990s?

	Having the Serbian National Bank issue over a billion dollars in credits to his political allies
	Removal of wage and price controls

	Doubling taxes to pay for war with Croatia
	Lowering the discount rate to almost 0%

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Question 212 ptsWhich of the following statements is correct concerning the views of new Keynesians and new classicals concerning aggregate supply? 

Which of the following statements is correct concerning the views of new Keynesians and new classicals concerning aggregate supply?

	New classical economists believe the short-run and long-run aggregate supply curves are both vertical.
	Both new Keynesian and new classical economists believe the aggregate supply curve slopes upward in the long run.

	New Keynesian economists believe the short-run and long-run aggregate supply curves slope upward.
	Both new Keynesian and new classical economists believe the aggregate supply curve is vertical in the long run.

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Question 222 ptsAn increase in the money supply will tend to raise stock prices and 

An increase in the money supply will tend to raise stock prices and

	reduce spending by consumers as they attempt to save in order to have the funds to buy more stock.
	increase spending by consumers as their wealth increases.

	decrease spending by firms as they cut back on inventory holdings.
	decrease spending by firms as they cut back on buying new plant and equipment.

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Question 232 ptsIf nominal money balances increase from $2 billion to $3 billion, while the price level increases from 100 to 150, real money balances will 

If nominal money balances increase from $2 billion to $3 billion, while the price level increases from 100 to 150, real money balances will

	have decreased by 50%.
	be unchanged.

	have increased by 50%.
	have increased by 100%.

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Question 242 ptsWhich of the following statements is correct? 

Which of the following statements is correct?

	New Keynesian economists believe money is neutral in the short run, but new classical economists do not.
	New classical economists believe money is neutral in the long run, but new Keynesian economists do not.

	Both new Keynesian and new classical economists believe money is neutral in the short run.
	Both new Keynesian and new classical economists believe money is neutral in the long run.

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Question 252 ptsIf the expected price level increases at the same time that the federal government cuts taxes, in the short run 

If the expected price level increases at the same time that the federal government cuts taxes, in the short run

	aggregate output and the price level will both fall.
	aggregate output and the price level will both increase.

	the price level will increase, but aggregate output may either increase or decrease.
	aggregate output will increase, but the price level will fall.

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Question 262 ptsWhy has the Fed made low inflation a major goal in recent decades? 

Why has the Fed made low inflation a major goal in recent decades?

	Because high inflation rates increase the value of the dollar and make U.S. goods less competitive in foreign markets
	Because high inflation rates reduce the tax revenues collected by the federal government

	Because Congress passed a law in 1981 mandating the Fed to reduce the inflation rate to 2%
	Because they wish to avoid the rapid and sustained price increases that occurred during the 1970s

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Question 272 ptsIn the new classical view, if the Chairman of the Fed announces a 10% increase in the money supply and then takes actions that cause the money supply to grow by more than 10%, the result will be

In the new classical view, if the Chairman of the Fed announces a 10% increase in the money supply and then takes actions that cause the money supply to grow by more than 10%, the result will be

	a 10% increase in the price level and an increase in output.
	a 10% increase in the price level and no change in output.

	a greater than 10% increase in the price level and an increase in output.
	a greater than 10% increase in the price level and no change in output.

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Question 282 ptsWhich of the following is the correct expression of the equation of exchange? 

Which of the following is the correct expression of the equation of exchange?

	MY = PV
	MV = PY

	M/P = VY
	MP = VY

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Question 292 ptsDeflation occurs when 

Deflation occurs when

	inflation does not rise as quickly.
	inflation is falling.

	the price level is falling.
	inflation domestically is lower than that found in other countries.

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Question 302 ptsAccording to the new classical approach to the aggregate supply curve, the aggregate supply curve slopes upward because 

According to the new classical approach to the aggregate supply curve, the aggregate supply curve slopes upward because

	businesses have difficulty in distinguishing relative price increases from general price increases.
	higher current output results in higher desired investment.

	higher prices result in higher levels of spending as consumers attempt to stay ahead of inflation.
	increases in the price level result in lower real balances.

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Question 312 ptsAccording to Keynes, the demand for real balances is best expressed by which of the following equations? 

According to Keynes, the demand for real balances is best expressed by which of the following equations?

	M/P = (1/V)Y
	M/P = L(Y, i)

	M/V = PY
	M/P = L(Y, i - im, πe - im)

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Question 322 ptsThe tendency of individuals to hold money to pay for unexpected transactions is known as 

The tendency of individuals to hold money to pay for unexpected transactions is known as

	Keynesian motive.
	conditional motive.

	precautionary motive.
	speculative motive.

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Question 332 ptsAt the natural rate of unemployment, 

At the natural rate of unemployment,

	only the structurally and the frictionally unemployed are without jobs.
	the economy is producing at its maximum level of output.

	the unemployment rate is zero.
	only the frictionally unemployed are without jobs.

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Question 342 ptsWhich of the following is a correct characterization of the views of economists on the relation between changes in the money supply and changes in output in the short run? 

Which of the following is a correct characterization of the views of economists on the relation between changes in the money supply and changes in output in the short run?

	Economists disagree over whether changes in the money supply and changes in output are closely related in the short run.
	Economists agree that changes in the money supply reflect, rather than cause, changes in output.

	Economists agree that changes in the money supply are responsible for subsequent changes in output.
	Economists disagree over whether changes in the money supply are responsible for subsequent changes in output or whether changes in the money supply reflect changes in output.

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Question 352 ptsThe effects of interest rates on the transactions demand for money 

The effects of interest rates on the transactions demand for money

	were explored by William Baumol and James Tobin.
	are of importance only during recessions.

	are usually considered to be negligible by modern economists.
	were explored by Irving Fisher.

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Question 362 ptsThe volume of transactions is 

The volume of transactions is

	smaller than GDP, because GDP includes purchases of assets which are not included in the volume of transactions.
	greater than GDP, because GDP does not include purchases of assets.

	smaller than GDP, because data on the volume of transactions are published monthly, whereas data on GDP are published annually.
	greater than GDP, because GDP does not include spending by the government.

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Question 372 ptsIn the Baumol-Tobin view, a decrease in interest rates will cause individuals to hold 

In the Baumol-Tobin view, a decrease in interest rates will cause individuals to hold

	larger money balances, and velocity will increase.
	smaller money balances, and velocity will increase.

	smaller money balances, and velocity will decrease.
	larger money balances, and velocity will decrease.

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Question 382 ptsAccording to Keynes, if the interest rate on bond falls, but aggregate income doesn't change, 

According to Keynes, if the interest rate on bond falls, but aggregate income doesn't change,

	velocity will decrease.
	the price level will decrease.

	velocity will increase.
	the demand for money will decrease.

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Question 392 ptsIf wages and prices in long-term contracts were fully indexed, 

If wages and prices in long-term contracts were fully indexed,

	prices would be more sticky in the short run.
	the stickiness of prices would not be affected.

	prices would be more sticky in the long run.
	prices would be less sticky in the short run.

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Question 402 ptsWhen economists state that in the long run prices are flexible they mean that 

When economists state that in the long run prices are flexible they mean that

	changes in the nominal money supply have greater impact on the level of economic activity in the long run than in the short run.
	inflation must be zero in the long run.

	in the long run, firms adjust their prices to reflect changes in cost or demand.
	a one-time increase in the money supply will affect output only in the long run.

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Question 412 ptsIn the new Keynesian approach, an increase in the nominal money supply 

In the new Keynesian approach, an increase in the nominal money supply

	raises real balances in the short run but not in the long run.
	raises real balances in both the short and long runs.

	raises real balances in the long run but not in the short run.
	does not raise real balances in either the short or long runs.

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Question 422 ptsReal money balances equal 

Real money balances equal

	MP.
	P/M.

	nominal money balances.
	M/P.

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Question 432 ptsAn increase in the money supply will result in a lower exchange rate because 

An increase in the money supply will result in a lower exchange rate because

	the real interest rate on domestic assets will fall relative to the rates on foreign assets.
	it will lead to lower inflation, thereby increasing the demand for domestic currency.

	it will lead to faster domestic growth, resulting in an increase in exports to other countries.
	the real interest rate on domestic assets will rise relative to the rates on foreign assets.

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Question 442 ptsIn the period since 1914, 

In the period since 1914,

	M2 velocity has been roughly constant.
	both M1 and M2 velocity have been roughly constant.

	neither M1 nor M2 velocity has been constant.
	M1 velocity has been roughly constant.

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Question 452 ptsIn the new Keynesian view, the larger the proportion of firms in the economy with sticky prices, 

In the new Keynesian view, the larger the proportion of firms in the economy with sticky prices,

	the less effective is fiscal policy in increasing output.
	the flatter the SRAS curve will be.

	the greater the increase in the price level for a given shift in the AD curve.
	the steeper the SRAS curve will be.

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Question 462 ptsIn terms of the AD-AS model, the new classical approach indicates that an unexpected decrease in the money supply will affect output because it will cause 

In terms of the AD-AS model, the new classical approach indicates that an unexpected decrease in the money supply will affect output because it will cause

	the AD curve to shift to the right, whereas the SRAS curve will be unaffected.
	the SRAS curve to shift up, whereas the AD curve will be unaffected.

	the AD curve to shift to the left, whereas the SRAS curve will be unaffected.
	the SRAS curve to shift down, whereas the AD curve will be unaffected.

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Question 472 ptsIn the new Keynesian expression for the price level, c represents 

In the new Keynesian expression for the price level, c represents

	the responsiveness of aggregate output to the difference between the actual price level and the expected price level.
	the marginal propensity to consume.

	the responsiveness of the price level to differences between actual aggregate output and full-employment aggregate output.
	the fraction of firms in the economy with sticky prices.

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Question 482 ptsWhich of the following statements is correct? 

Which of the following statements is correct?

	Prices have fallen in the majority of years since 1939.
	Throughout U.S. history prices have fallen in more years than they have risen.

	Prices have risen every year in the United States since 1800.
	Prices fell every year in the 1980s.

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Question 492 ptsIf nothing else changes, a higher price level 

If nothing else changes, a higher price level

	decreases the value of nominal money balances.
	leads to a proportionately lower nominal demand for money.

	increases the value of real money balances.
	leads to a proportionately higher nominal demand for money.

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Question 502 ptsSustained inflation will be caused by a sustained growth in the nominal money supply at a rate faster than the growth rate of velocity and the growth rate of output according to 

Sustained inflation will be caused by a sustained growth in the nominal money supply at a rate faster than the growth rate of velocity and the growth rate of output according to

	new classical economists but not according to new Keynesian economists.
	both new classical and new Keynesian economists.

	neither new classical nor new Keynesian economists.
	new Keynesian economists but not according to new classical economists.