ECO/302 Intermediate Macroeconomics Week 7 Quiz - Strayer

ECO 302 Week 7 Quiz – Strayer 

Chapter 10

 

TRUE/FALSE

 

            1.         High powered money is commodity money like gold and silver.

 

                                     

 

            2.         If households reduce money balances, then their transactions costs go up.

 

                                     

 

            3.         If the money supply grows faster than money demand, then the price level rises.

 

                                     

 

            4.         If the interest rate increases, then the real demand for money also increases.

 

                                     

 

            5.         The neutrality of money means that one time changes in the money supply do not affect real variables.

 

                                     

 

            6.         M1 includes a broader array of deposit accounts than M2 does.

 

                                     

 

            7.         In the Barro model, money and barter can both be used for exchanges.

 

                                     

 

            8.         In the Barro model, households hold money as a long-term store of value.

 

                                     

 

            9.         If the price level doubles, then a household’s nominal demand for money also doubles.

 

                                     

 

            10.       If the nominal quantity of money supplied does not vary, then the price level will be countercyclical.

 

                                     

 

MULTIPLE CHOICE

 

            1.         Fiat money is money that has value because of:

a.         its intrinsic value.        c.         government decree.

b.         it is a commodity.       d.         all of the above.

 

 

                                     

 

            2.         Commodity money is money that has value because:

a.         of the intrinsic value of the commodity.         c.         the government says so.

b.         it is legal tender.          d.         all of the above.

 

 

                                     

 

            3.         If a person holds one dollar and does not lose it,  then as long as the person holds that dollar they will have:

a.         the commodity value of the dollar.     c.         an interest bearing asset.

b.         one dollar in currency.            d.         all of the above.

 

 

                                     

 

            4.         High powered money is:

a.         money held by business for investment.        c.         total currency in circulation.

b.         total currency in circulation plus depository institutions deposits at the Federal Reserve.              d.         government bonds held by the public and depository institutions.

 

 

                                     

 

            5.         A monetary aggregate is:

a.         high powered money.             c.         money defined more broadly than currency.

b.         commodity money.     d.         total currency in circulation plus depository institutions deposits at the Federal Reserve. 

 

 

                                     

 

            6.         US M1 money includes:

a.         currency held by the public.   c.         traveler’s checks.

b.         checkable deposits.     d.         all of the above.

 

 

                                     

 

            7.         US M1 money includes:

a.         savings deposits.         c.         time deposits.

b.         checkable deposits.     d.         all of the above.

 

 

                                     

 

            8.         US M1 money includes:

a.         currency, traveler’s checks and checkable deposits.   c.         currency, checkable deposits, savings deposits.

b.         checkable deposits, traveler’s checks and savings deposits.  d.         currency, time deposits, checkable deposits.

 

 

                                     

 

            9.         US M2 money includes:

a.         currency.         c.         small time deposits.

b.         demand deposits         d.         all of the above.

 

 

                                     

 

            10.       US M2 money includes:

a.         currency, time deposits government bonds.   c.         checkable deposits, savings deposits, small time deposits.

b.         savings deposits, small time deposits,  private bonds.           d.         retail money market mutual funds, small time deposits, government bonds.

 

 

                                     

 

            11.       Money is different from other assets like capital and bonds in that:

a.         money does not pay interest. c.         capital and bonds are better long term stores of value.

b.         money can be spent for purchases.    d.         all of the above.

 

 

                                     

 

            12.       Money is different from other assets like capital and bonds in that:

a.         money does not pay interest. c.         money is a better long term store of value.

b.         money has intrinsic value.      d.         all of the above.

 

 

                                     

 

            13.       Money is different from other assets like capital and bonds in that:

a.         money pays a higher interest rate.      c.         money is a better long term store of value.

b.         money can be spent for purchases.    d.         all of the above.

 

 

                                     

 

            14.       Money is different from other assets like capital and bonds in that:

a.         money has intrinsic value.      c.         capital and bonds are better long term stores of value.

b.         money pays a higher rate of interest. d.         all of the above.

 

 

                                     

 

            15.       When households reduce their average  money balances, they 

a.         purchase more goods. c.         incur more opportunity costs.

b.         they earn less interest.            d.         incur more transaction costs.

 

 

                                     

 

            16.       If a person’s income doubles we expect their cash holding to:

a.         double.            c.         less than double.

b.         more than double.       d.         decline.

 

 

                                     

 

            17.       Economies of scale in cash management means:

a.         at a higher income household’s hold more money as a proportion of their income.  c.         the proportion of income held is not affected by household income.

b.         at lower incomes household’s hold more money as a proportion of their income     d.         at lower income households hold less money as a proportion of their income.

 

 

                                     

 

            18.       Real money demand does not change when:

a.         nominal GDP changes.            c.         the price level changes.

b.         the interest rate changes.         d.         all of the above.

 

 

                                     

 

            19.       Among the source of transactions costs associated with reducing average money balances are:

a.         brokerage fees.            c.         the time spent going to the ATM.

b.         the time spent going to the bank.        d.         all of the above.

 

 

                                     

 

            20.       Among the sources of transactions costs associated with reducing average money balances are:

a.         brokerage fees.            c.         foregone  interest payments.

b.         opportunity costs.      d.         all of the above.

Chapter 11

 

TRUE/FALSE

 

            1.         The real rate of interest is the nominal rate of interest less the expected inflation rate.

 

                                     

 

            2.         The real return on money is zero.

 

                                     

 

            3.         An increase in the money growth rate affects household consumption, C.

 

                                     

 

            4.         In the market clearing model, an increase in the money growth rate leads to an increase in the inflation rate.

 

                                     

 

            5.         In the market clearing model an increase in the money growth rate leads to a decrease in the nominal interest rate.

 

                                     

 

            6.         Inflation is a measure of the growth of prices in the volatile food and energy categories.

 

                                     

 

            7.         Households with rational expectations have no errors in their predictions.

 

                                     

 

            8.         Expected and actual inflation are equal in a model with rational expectations.

 

                                     

 

            9.         Deflation occurs when the inflation rate slows down, but remains positive.

 

                                     

 

            10.       Data show a strong negative relationship between the inflatin rate and the growth rate of nominal currency.

 

                                     

 

 

 

MULTIPLE CHOICE

 

            1.         The actual inflation rate is:

a.         the change in the price level divided by the original price level.         c.         the original price level divided by the new price level. 

b.         The original price level divided the change in price level.       d.         the new price level divided by the original price level. 

 

 

                                     

 

            2.         If the price level last year was 110 and this year is 118, then the inflation rate between last period and this period was:

a.         7.3%.   c.         8%

b.         7%.      d.         6.8%.

 

 

                                     

 

            3.         If the price level last year was 135 and this year is 142, then the inflation rate between last period and this period was:

a.         4.9%.   c.         5.1%

b.         7%.      d.         5.2%.

 

 

                                     

 

            4.         If the price level last year was 106 and this year is 102, then the inflation rate between last period and this period was:

a.         -3.8%  c.         3.8%

b.         4%.      d.         -3.9%.

 

 

                                     

 

            5.         The unexpected inflation rate is:

a.         the expected inflation rate less the actual inflation rate.         c.         the actual inflation rate less the expected inflation rate.

b.         the expected inflation rate divided by the actual inflation rate.          d.         the actual inflation rate divided by the expected inflation rate.

 

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ECO 302 Week 7 Quiz - Strayer

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