Macroeconomics Exam 2

Purchasing power parity looks at changes in domestic vs. foreign price level

Which of the following is true?

it is logically possible for both the natural rate of unemployment and the cyclical rate of unemployment to both simultaneously increase or decrease together

Which of the following is true

In the fisher version of money is an assets whereas in the Cambridge version it is primarily a medium of exchange

What is not true with respect to various versions of quantity theory?

Minimum wage price controls cause surpluses in the market

Which of the following is true?

None of the above are implied by Say’s Law

Say’s Law implies which of the following?

The final output of all consumer goods and service

Which of the following is included in Gross National Product (GNP)?

The interest rate is the price of money

Which of the following would a classical macro-economist disagree with?

The real money supply is equal to the nominal money supply divided by a price index

Which of the following is true?

They reduce unemployment across the economy

Which of the following is not true about tariffs (import taxes) applied to imports?

1%

Using the income version of the quantity theory of money, calculate the annual inflation rate if the following events occur: money supply increase 6% velocity of circulation decreases 3%, and real quantity of output increases at 2%

Paper money requires legal laws before people will trust it and accept it

Which of the following statements about money is not true?

Repressed inflation actually magnifies inflation

Which of the following is true

450,000

Suppose we have the following data: (4th order) Value of trees $5 per tree and 1,000 trees harvested; (3rd order) 1,000 trees fabricated in to $25 wood pulp per ton (1,000 tons); (2nd order) 500,000 sheets of book paper ($0.10 per sheet) and 1,000 rolls facial tissue ($10 each); (1st order) 20,000 hardback books at Borders book store for $20 each and 50,000 boxes of Kleenex tissue at Safeway for $1 each. Which of the following is the correct calculation of GNP?

If nominal interest rate is below the real interest rate, inflation of nominal prices is expected in the future

Which of the following is not true?

Federal Reserve Open Market Operations

Which of the following would not be a factor in influencing velocity of circulation?

Government budgetary deficit cause inflation

Which of the following is not true?

Increasing inflation expectations

Which of the following would not increase the real value of money ceteris paribus?

Since human have unlimited wants the demand to hold cash-balances is unlimited

Which of the following is not true?

A state typically attains a monopoly over money because it is an attractive source of money

What does the “defense-sovereignty” explanation of a state’s monopoly over money argue?

Nominal interest rates are positively correlated with expected inflation

In “Expected Inflation and Interest Rates”, J.H. McCullough describes Gibson’s paradox. What is Gibson’s paradox?

Coin owners melted coins because the metal in the coin was worth more than face value of the coin

Nicholas Copernicus wrote in “On the minting of money”: Why were coins being melted down?

The collapse of foreign trade (domestic and international)

According to thomas rustici, Dima Shamoun, and Theo Shamoun in their article, "The Smoot-Hawley Tariff and the great depression", what caused much of the banking collapse in the U.S. during the great depression?

today's objective exhcange value of money is the result of both its subjective value as means of exchange and for its use as a commodity

In the "Theory of money and credit" Lud wig von Mises writes: Mises is saying that

Subjective valuations of time by individuals in the market

In the essay, "the classical macro model" by thomas rusitici, he noted the "capital theory" debates within the classical macro school of thought. In that debate, economist Eugen von Bohm Bawerk argued that the rate of interest was determined by;