ECON103 MCQ Flashcards Midterm #2

If the money supply increases 12 percent, velocity decreases 4 percent, and the price level increases 5 percent, then the change in real GDP must be ___ percent

a. 3.

According to the Fisher Effect, the nominal interest rate moves one-for-one with changes in the:

a. Expected inflation rate.

The rate of inflation is the:

a. Percentage change in the level of prices.

Most spells of unemployment are ___ term, and most weeks of unemployment are attributable to ____-term unemployment

a. Short, long.

Between 1880 and 1896, the price level in the United States fell 23 percent. This movement was ___ for bankers of the northeast and ____ for farmers of the south and west.

a. Good, bad.

Wasnt in pic…

a.

Unions contribute to structural unemployment when collective bargaining results in wages:

a. Above the equilibrium level.

The ex ante real interest rate is based on ____ inflation, while the ex post real interest rate is based on ____ inflation.

a. Expected, actual.

The hyperinflation experienced by interwar germany illustrates how fiscal policy can be connected to monetary policy when government expeditures are financed by:

a. Printing large quantities of money.

All of the following are considered major functions of money except as a:

a. Way to display wealth.

In a traditional reserve banking system, banks create money when they

a. Make loans.

The money supply will decrease if the

a. Currency-deposit ratio increases.

The quantity of money in the united states is essentially controlled by the:

a. Federal reserve.

If the quantity of real money balances is ky, where k is a constant, then velocity is

a. 1/k.

In prisoner of war camps during world war II, the “currency” used was:

a. Cigarettes.

A policy that decreases the job separation rate ___ the natural rate of unemployment

a. Will decrease.

The quantity theory of money assumes that

a. Velocity is constant.

If the monetary base equals $400 billion and the money multiplier equals 2, then the money supply equals

a. $800 billion.

Frictional unemployment is unemployment caused by:

a. The time it takes workers to search for a job.

To make a trade in a barter economy requires:

a. A double coincidence of wants