Econ Chapter 16
If an economy produces 2,000 units of output with a price level of $2 and the money supply (M) is $1,000, velocity is:
4.
Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 4 percent. At the end of the year, you have earned a real rate of interest of:
6 percent.
Price indexes:
All of these statements are true.
If an economy produces 2,500 units of output with a money supply of $500 and a velocity of 10, we know the price level must be:
$2.
Unexpected high inflation redistributes wealth from:
those who save to those who borrow.
The quantity theory of money states explicitly that the:
value of money is determined by the overall quantity of money in existence.
The number of transactions a typical dollar is used in during a given period is called the:
velocity of money.
According to the quantity theory of money, a decrease in prices would be due to:
a decrease in the money supply.
Suppose the nominal interest rate is 4 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 5 percent. At the end of the year, you have earned:
a nominal increase in your savings of $40.
A measure of the average price level for GDP is called the:
aggregate price level.
The constant velocity of money in the quantity equation implies that any increase in the money supply has to lead directly to:
an increase in P.
According to the quantity theory of money, an increase in the money supply leads to:
an increase in prices, as there are more dollar bills spent on the same number of goods and services.
When real rates of interest are negative, borrowers:
benefit, because the value of their debt declines.
In the long run, an increase in the aggregate price level:
doesn't change real output.
If the value of your savings is increasing over time, it must be true that the inflation rate:
is lower than the nominal interest rate.
According to the quantity theory of money, increasing the money supply:
leads to inflation.
The nominal interest rate is:
not adjusted for inflation.
If the Fed doubled the money supply in one day, the amount of goods and services traded would:
not change.
When real rates of interest are positive, it is better to be a:
saver than a borrower, because the value of savings and debts are increasing.
The quantity theory of money relies on which variable to remain constant?
Velocity of money