With unstable money demand and thus an unstable ________ curve, fluctuations in
ID: 1096768 • Letter: W
Question
With unstable money demand and thus an unstable ________ curve, fluctuations in output are ________ by the fortuitous selection of ________ targeting.
LM, minimized, interest rate
IS, minimized, money supply
LM, eliminated, interest rate
IS, eliminated, interest rate
LM, minimized, money supply
When the Fed buys government securities, ________ and the money supply ________.
e falls, rises
H rises, rises
c rises, falls
e rises, falls
c falls, rises
From a long-run equilibrium with x = p = pe = 10, a reduction in nominal GDP growth to 4 percent results in the long run in output of ________ and inflation of ________.
94, 4 percent
100, 10 percent
94, 10 percent
96, 4 percent
100, 4 percent
If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of deposits would be (assume that citizens prefer to keep 10% of their money as cash)
100/0.35 which is approximately 286.
100/0.10 which is 1000.
100/0.25 times 1.1 which is 440.
100/0.35 times 1.1 which is approximately 314.
If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have
increased by 18%.
decreased by 2%.
increased by 2%.
decreased by 18%.
The neoclassical growth theory implies that
the rate of return on capital is low in poor countries.
there should be large flows of capital from rich countries to poor countries.
the marginal product of capital is low in poor countries.
all of the above.
In Figure 8-6 above, a contractionary monetary policy with no change in inflationary expectations takes us along path
E.
G.
H.
F.
A.
LM, minimized, interest rate
IS, minimized, money supply
LM, eliminated, interest rate
IS, eliminated, interest rate
LM, minimized, money supply
When the Fed buys government securities, ________ and the money supply ________.
e falls, rises
H rises, rises
c rises, falls
e rises, falls
c falls, rises
From a long-run equilibrium with x = p = pe = 10, a reduction in nominal GDP growth to 4 percent results in the long run in output of ________ and inflation of ________.
94, 4 percent
100, 10 percent
94, 10 percent
96, 4 percent
100, 4 percent
If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of deposits would be (assume that citizens prefer to keep 10% of their money as cash)
100/0.35 which is approximately 286.
100/0.10 which is 1000.
100/0.25 times 1.1 which is 440.
100/0.35 times 1.1 which is approximately 314.
If the inflation rate is 10% and nominal GDP growth is 8% then real GDP must have
increased by 18%.
decreased by 2%.
increased by 2%.
decreased by 18%.
The neoclassical growth theory implies that
the rate of return on capital is low in poor countries.
there should be large flows of capital from rich countries to poor countries.
the marginal product of capital is low in poor countries.
all of the above.
In Figure 8-6 above, a contractionary monetary policy with no change in inflationary expectations takes us along path
E.
G.
H.
F.
A.
Explanation / Answer
1) (a) LM, minimized, interest rate
2) (b) H (monetray Base) rises, rises
3) (d) 96, 4
4) (d) If the amount of high-powered money were 100 and the bank reserve holding ratio was 0.25 then the maximum stock of deposits would be (assume that citizens prefer to keep 10% of their money as cash) :100/0.35 times 1.1 which is approximately 314.
5) growth rate of real GDP + growth rate of price index (the inflation rate) = growth rate of nominal GDP. Thus Real GDP growth = -2%, i.e decreased by 2%.
6) (b) it should flow from rich to poor countries.
7) cannot access the image.
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