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Understanding Monetary Policy 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. One of the major causes for the creation and distribution of wealth and income is:

Question 2 2. Which type of government tends to be friendlier to free markets?

Question 3 3. The measurement of the distribution of ownership in a society is called _____.

Question 4 4. The measurement of a nation's distribution of Gross Domestic Product is called _____.

Question 5 5. A monetary policy is:

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Question 6 6. In order to adjust a nominal interest rate for inflation, which of the following formula should be used?

Question 7 7. Which of the following is FALSE regarding real interest rates?

Question 8 8. 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 9 9. 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 10 10. A money market account at the bank offers a 4% nominal interest rate, while inflation is expected to be 3%. What is the real interest rate for this account?

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Question 11 11. What theory states that in the long run, changes in money supply influence nominal variables but not real economic variables?

Question 12 12. What's the monetarists' tool of choice in addressing economic fluctuations?

Question 13 13. What's the key focus in monetarism?

Question 14 14. What's the best description of the monetarists' view of government intervention into the economy with aggressive fiscal policy?

Question 15 15. The most well-known contemporary monetarist is whom?

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Question 16 16. What kinds of loans are associated with a short-term interest rate?

Question 17 17. Of the following, which are you most likely to loan money to with the lower interest rate if any at all?

Question 18 18. What does it mean when your long-term interest rates are higher than short-term interest rates?

Question 19 19. What kinds of loans are associated with long-term interest rates?

Question 20 20. Which of the following is a sign that there is something wrong with the economy?

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Question 21 21. What is one way the government can increase their money supply?

Question 22 22. What does the graph indicate?

Question 23 23. What is a liquidity trap?

Question 24 24. What does liquidity mean?

Question 25 25. Why would an investor not want to loan money to the government?

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Question 26 26. Monetarism is the economic viewpoint that states which of the following?

Question 27 27. 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 28 28. According to the quantity theory of money, an increase in the money supply results in an increase in which of the following?

Question 29 29. According to the quantity theory of money, increasing the money supply will lead to what?

Question 30 30. The quantity theory of money describes the relationship between what fiscal components?

Understanding Monetary Policy 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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