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Central Bank and the Money Supply: Homework Help Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. If nominal GDP = $5,000 billion and the money supply is $1,000 billion, assuming a constant price level, what is the velocity of money?

Question 2 2. Which of the following statements is FALSE regarding the discount rate?

Question 3 3. In a fractional reserve banking system, how does a decrease in reserve requirements affect the money supply?

Question 4 4. In order to adjust a nominal interest rate for inflation, which of the following formula should be used?

Question 5 5. What's hyperinflation?

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Question 6 6. What is the most important determinant of saving?

Question 7 7. What are some of the objectives of the Fed?

Question 8 8. What is the interest rate that the Federal Reserve charges on loans it makes to member banks called?

Question 9 9. Hyperinflation is usually associated with:

Question 10 10. An increase in the money supply will likely

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Question 11 11. The real interest rate for a consumer loan is 5%, and the expected inflation rate is 3%. What is the nominal interest rate on this consumer loan?

Question 12 12. How would economists graphically illustrate a decrease in the money supply?

Question 13 13. Assume that the Federal Reserve increases the monetary base by $1 billion when the reserve requirement is 10 percent. The money supply will increase by:

Question 14 14. In the country of Athenia, banks charge 10% interest on all loans. If the general price level has been increasing at a rate of 2% per year, what is the real rate of interest in Athenia?

Question 15 15. If the Federal Reserve lowers reserve requirements, nominal GDP will most likely do which of the following?

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Question 16 16. Which of the following is FALSE regarding real interest rates?

Question 17 17. If all other factors remain equal, what would happen to interest rates when the amount of money circulating in the economy is increased?

Question 18 18. The purchases and sales of government securities in the open market by the Federal Reserve are referred to as which of the following?

Question 19 19. Which of the following statements is true about the quantity theory of money?

Question 20 20. If the nominal gross domestic product is $6 trillion and the money supply is $2 trillion, assuming a constant price level, the velocity of money is

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Question 21 21. What will happen if the Federal Reserve sells a significant amount of government securities in the open market?

Question 22 22. Which of the following statements BEST explains the velocity of money?

Question 23 23. Let us assume that the price level remains constant and the nominal gross domestic product is $8 trillion and the money supply is $2 trillion. Use the equation of exchange (MV=PY) to determine what the velocity of money would be.

Question 24 24. What is directly connected with taking a loan for private investment in the market for loanable funds?

Question 25 25. What will the purchase of government bonds from the public in the open market by the central bank do?

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Question 26 26. How will an increase in national saving affect the real interest rate and therefore investment?

Question 27 27. The Fed's monetary policy has the greatest positive effect on real Gross Domestic Product under what set of conditions?

Question 28 28. Which of the following is an inaccurate description of The Federal Reserve?

Question 29 29. Economists use the _____ to explain the link between inflation and the money supply.

Question 30 30. If a country has a money supply of 20 billion dollars, a real GDP of 100 billion dollars, and a price level of 1, then what's the velocity of money in this country?

Central Bank and the Money Supply: Homework Help Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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