Ryan saved $50,000 last year in his bank account so that he could buy a car this
ID: 1200752 • Letter: R
Question
Ryan saved $50,000 last year in his bank account so that he could buy a car this year. In this case, money served the function of a ________.
A.
means of deferred payment
B.
unit of account
C.
store of value
D.
medium of exchange
A bank is said to have enough liquidity if:
A.
it holds deposits amounting to at least $100,000.
B.
it operates for seven days a week for more than 12 hours a day.
C.
it has enough funds to conduct its
dayminustominusday
businesses and meet the regulatory requirements.
D.
the value of its assets exceeds the value of its liabilities by at least $50,000.
Consider an economy that only produces wooden chairs. In 2012, the economy produced 100 wooden chairs priced at $10 each. The nominal GDP of the economy for the year 2012 will be:
A.
$10,000.
B.
$10.
C.
$100.
D.
$1,000.
Hyperinflationary episodes are always related to extremely rapid growth of:
A.
real GDP.
B.
money supply.
C.
interest rates.
D.
money demand.
Which of the following financial organizations have the ability to influence the supply of reserves in the United States?
A.
The World Bank
B.
The Fed
C.
Only private commercial banks
D.
Only public sector banks
A retired worker receives a pension that is not indexed to inflation. Which of the following will happen if the rate of inflation rises?
A.
The retiree will be better off.
B.
The retiree's purchasing power will fall.
C.
The shareholders of the firm in which he worked will lose.
D.
The retiree's purchasing power will increase.
Assuming all else equal, what is likely to happen to the demand curve for reserves in an economy if it goes through a period of rapid expansion?
A.
There will be a n upward movement along the demand curve for reserves.
B.
The demand curve for reserves will shift to the left.
C.
There will be a downward movement along the demand curve for reserves.
D.
The demand curve for reserves will shift to the right.
If the nominal interest rate in an economy is 9% and the expected inflation rate is 6%, then the expected real interest rate in the economy is:
A.
15%.
B.
9%.
C.
6%.
D.
3%.
If nominal GDP increases, what might be the cause of this increase?
If nominal GDP increases, this could be caused by:
(Select
all that
apply.)
A.
An increase in the price level
B.
Deflation
C.
An increase in real GDP
D.
A decrease in the price level
Given the following information, what is the growth rate of nominal GDP?
Upper Y 0Y0
real GDP =
$10001000
(in millions)
Upper Y 1Y1
real GDP =
$11001100
(in millions)
Upper Y 0Y0
price level = 120120
Upper Y 1Y1
price level = 130130The growth rate of nominal GDP is
nothing %.
(Round
your answer to the nearest
hundredth.)
According to the quantity theory of money, what must the growth rate of the money supply be given the following information?
The growth rate of real GDP is
1.01.0%.
The growth rate of nominal GDP is
3.83.8%.
The nominal interest rate is
7.17.1%.
The real interest rate is
4.34.3%.
The money supply (M2) is
$10 comma 61210,612
(in billions)According to the quantity theory of money, the growth rate of the money supply must be
nothing %.
(Round
your answer to the nearest
tenth.)
According to the quantity theory of money, what is the inflation rate?
Use the information given above and calculate the inflation rate.
According to the quantity theory of money, the inflation rate is
nothing %.
(Round
your answer to the nearest
tenth.)
According to the quantity theory of money, the inflation rate is
A.
the ratio of money supply to nominal GDP.
B.
the gap between the growth rate of money supply and the growth rate of real GDP.
C.
the gap between the nominal and real interest rates.
D.
the gap between the growth rate of money supply and the growth rate of nominal GDP.
If the inflation rate is
positivepositive,
what must be true?
A.
The growth rate of nominal GDP
greater than>
the growth rate of money supply.
B.
The growth rate of real GDP
less than<
the growth rate of money supply.
C.
The growth rate of real GDP
greater than>
the growth rate of money supply.
D.
The growth rate of nominal GDP
less than<
the growth rate of money supply.
An open market operation is ____________.
A.
the process of selling Fed-issued IOUs between banks.
B.
an exchange between a private bank and the Federal Reserve where the Fed buys or sells government bonds to private banks.
C.
where a bank borrows reserves or bonds from the Federal Reserve's discount window.
D.
an exchange between private banks where the banks buy or sell bonds to each other.
The Federal Reserve conducts open market operations when it wants to ____________.
A.
change the liquidity levels of banks.
B.
influence the discount rate.
C.
influence the federal funds rate.
D.
change the level of reserves it holds for banks.
When the Fed
sellssells
government bonds
toto
private banks, it
the electronic reserves that banks hold.
Explanation / Answer
1. Option C is correct.
Here the money is stored in the bank for a car purchase in future, by doing this, the value would not fall because of the interest rate earned on keeping deposit in thew bank.
2. Option C is correct.
When bank can meet its business requirement and met the regulatory neds, it is said to have enough liquidity.
3. Option D is correct.
The nominal GDP = $10*100 = $1000.
4. Option B is correct.
Hyperinflation is associated with increase in money supply that is not supported by the increase in supply of goods and services. With more money in the economy, people have more cash in hand, than required, causing the demand for goods and services to increase, with slow growth in production of goods and serives, creating a gap and leading to rapid price rise.
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