Description

Give me the reasons.

Question 4 options: 

excessive growth of velocity. 

excessive growth of income. 

excessive growth of money supply. 

all of the above.

Question 5 (1 point) The Quantity Theory of Money is Question 5 options:

holds true in the long run.

holds true in the short run.

holds true in both the short and long run.

is independent of the length of time.

Question 6 (1 point)  The Fisher effect says that 

Question 6 options: 

the nominal interest rate adjusts one for one with the inflation rate. 

the growth rate of the money supply is negatively related to the velocity of money. 

real variables are heavily influenced by the monetary system. 

None of the above is correct.

Question 7 (1 point)  When the money market is drawn with the value of money on the vertical axis, an increase in the money supply causes the equilibrium value of money 

Question 7 options: 

and equilibrium quantity of money to increase. 

and equilibrium quantity of money to decrease. 

to increase, while the equilibrium quantity of money decreases. 

to decrease, while the equilibrium quantity of money increases.

Question 8 (1 point)  “Inflation fallacy” is based on the fact that inflation is accompanied bt 

Question 8 options: 

falling real income. 

rising real income. 

rising nominal income. 

falling nominal income.

Question 9 (1 point)  Jim transfers money from his checking account to his savings account. This action 

Question 9 options: 

reduced M1 and increases M2. 

reduces M1 and leaves M2 unchanged. 

leaves both M1 and M2 unchanged. 

increases M1 and M2.

Question 11 (1 point)  When the Fed wants to change the money supply, it most frequently 

Question 11 options: 

conducts open market operations. 

changes the discount rate. 

changes the reserve requirement. 

changes the prime rate.

Question 12 (1 point)  Suppose a bank is operating with a leverage ratio of 10. A 6 percent increase in the value of assets 

Question 12 options: 

will reduce liabilities by 6 percent. 

will result in a 60 percent increase in owner’s equity. 

will result in a 60 percent decrease in owner’s equity. 

will reduce liabilities by 10 percent.

Question 13 (1 point)  Suppose a bank is operating with a leverage ratio of 10. A 6 percent increase in the value of assets 

Question 13 options: 

will reduce liabilities by 6 percent. 

will result in a 60 percent increase in owner’s equity. 

will result in a 60 percent decrease in owner’s equity. 

will reduce liabilities by 10 percent.

Question 14 (1 point)  A store of value is an item that 

Question 14 options: 

people can use to transfer purchasing power from the present to the future. 

can be converted into currency with ease. 

buyers give to sellers when they want to purchase goods and services. 

that people use to post prices and record debts.

Question 15 (1 point)  In the special case of the 100-percent reserve banking the money multiplier is 

Question 15 options: 

0. 

1. 

100. 

None of the above.

Question 16 (1 point)  The interest rate the Fed charges on loans it makes to banks is called 

Question 16 options: 

the prime rate. 

the federal funds rate. 

the required reserve rate. 

the discount rate.