microeconomics chapter 16 connect
Which of the curves shown in the two graphs represent a typical short-run Phillips curve?
D
True or false: The distributional costs of inflation depend on normative judgments one makes about winners and losers in an inflation.
True
According to the quantity theory of money, if the money supply goes down 2 percent,
inflation will be -2%.
Banks will be hurt by an inflation if they
lend in fixed nominal contracts.
The velocity of money equals
the amount of income per year generated by a dollar.
The velocity of money is defined as
the number of times per year, on average, a dollar gets spent on goods and services.
Benefits of small amounts of inflation include
the placebo effect. more expansionary monetary policy. the facilitation of relative prices changes.
According to the quantity theory of money, changes in the money supply cause changes in
the price level.
Hyperinflation is best defined as
triple-digit inflation.
Along the short-run Phillips curve, as
unemployment rises, inflation falls.
As one moves from left to right along a short-run Phillips curve,
unemployment rises, inflation falls.
The number of times per year, an average dollar gets spent on goods and services is known as the _____.
velocity of money
Which of the following distinguishes the short-run from the long-run Phillips curve?
Along the short-run Phillips curve, inflation expectations are constant, while along the long-run Phillips curve they change.
If nominal GDP is 20,000 and the money supply is 2,000, what is the velocity of money?
10
If nominal GDP is 2,000 and the money supply is 100, what is the velocity of money?
20
True or false: A major reason policymakers like low amounts of inflation is that it eliminates money illusion.
False
True or false: Because the cost of living rises, inflation makes a society poorer.
False
True or false: Goods inflation measures the change in the prices of goods society consumes; asset inflation measures the changes in prices of both the goods we consume and assets.
False
True or false: Goods price inflation and asset price inflation are different names for the same phenomenon.
False
True or false: The distributional costs of inflation refer to the fact that inflation makes society poorer on average.
False
Which of the following best summarizes the quantity theory of money?
Inflation is always and everywhere a monetary phenomenon.
"Inflation is always and everywhere a monetary phenomenon" summarizes which theory?
The quantity theory of money
True or false: A benefit of small amounts of inflation is that it can facilitate relative price changes.
True
True or false: A major reason policymakers like low amounts of inflation is that it lets them take advantage of money illusion.
True
True or false: Along the long-run Phillips curve, inflation expectations equal actual inflation.
True
True or false: On average, inflation makes a society neither richer nor poorer.
True
True or false: One of the costs of inflation is informational costs.
True
Which of the curves shown represent a typical short-run Phillips curve?
b
Homeowners can benefit from an inflation if they
borrowed at fixed nominal interest rates.
The winners in an inflation are those who
can raise their prices and still sell their goods.
The losers in an inflationary period are those who
can't raise their prices.
An asset price inflation tends to redistributes wealth from
cautious individuals to risky individuals.
True or false: One of the costs of inflation is unemployment costs.
false
Institutionally focused economists believe increases in prices
force government to increase the money supply.
If inflation hits levels of 1,000 percent or more per year, the economy is experiencing _____.
hyperinflation
Institutionally focused economists believe that firms
increase prices without considering their decisions on the price level.