From the equation of exchange, if both nominal income and the quantity of money (M) have tripled, while the price level (P) has increased by 50 percent and velocity (V) remains constant, then real output (Y) ________. A) also triples B) increases by 50 percent C) doubles D) decreases by 50 percent E) none of […]
Date: September 10th, 2020
The most likely cause of a hyperinflation is A) central bank incompetence. B) the inability to finance government spending through taxation or borrowing. C) an acute shortage of natural resources. D) over-aggressive labor unions. ANSWER B
Date: September 10th, 2020
The Friedman Rule is optimal because A) households would be able to buy more as prices decrease. B) the central bank has better control of the money supply. C) money is neutral. D) households are indifferent between holding bonds and money. ANSWER D
Date: September 10th, 2020
In the simple Keynesian model, if there is an autonomous investment falls by $20 billion and the MPC (b) is 0.60, the equilibrium income level will increase by a. $13.3 billion. b. $20 billion. c. $50 billion. d. $100 billion. ANSWER C
Date: September 10th, 2020
A lump-sum tax is a tax that A) can be avoided by strategic behavior. B) does not depend on the actions of the economic agent being taxed. C) does not depend on the actions of the government. D) distorts economic decisions. ANSWER B
Date: September 10th, 2020
Which of the following is among the possible reasons that the 2007-2009 financial crisis did not result in an economic depression? A) the declaration of a bank holiday by the nation’s President B) international policy coordination C) strict reliance on conventional monetary policy D) government spending restraint ANSWER B
Date: September 10th, 2020
A numeraire is A) an average good. B) a tax levied on each consumer. C) a good used as a unit of account. D) an optimal bundle of goods. ANSWER C
Date: September 10th, 2020
According to Irving Fisher, velocity ________. A) is determined by institutions that affect the way individuals transact B) is affected by institutions only gradually C) is assumed constant in the short run D) all of the above E) none of the above ANSWER D
Date: September 10th, 2020
In the two-period model with asymmetric information, a bank A) creates money. B) keeps money safely. C) multiplies reserves. D) borrows and lends. ANSWER D
Date: September 10th, 2020
Describe the role of uncertainty at the beginning of and in the unfolding of a financial crisis. What will be an ideal response? ANSWER Regardless of the initial spark, an adverse event within and/or affecting the financial sector becomes a systemic crisis when it gives rise to substantial uncertainty. Because the gathering, analysis, and […]
Date: September 10th, 2020
