5学原理（宏观）第五版测试题库(30)

Chapter 30

Money Growth and Inflation

TRUE/FALSE

1. The inflation rate is measured as the percentage change in a price index.ANS: T DIF: 1 REF: 30-0 NAT: Analytic LOC: Unemployment and inflation TOP: Inflation KEY: MSC: Definitional

2. U.S. prices rose at an average annual rate of about 4 percent over the last 70 years.ANS: T DIF: 1 REF: 30-0 NAT: Analytic LOC: The role of money TOP: Inflation MSC: Analytical

3. The United States has never had deflation.ANS: F DIF: 1 REF: 30-0 NAT: Analytic LOC: The role of money TOP: Deflation

MSC: Definitional

4. In the 1990s, U.S. prices rose at about the same rate as in the 1970s.ANS: F DIF: 1 REF: 30-0 NAT: Analytic LOC: The role of money TOP: U.S. inflation MSC: Definitional

5. As the price level falls, the value of money falls.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Value | Money

MSC: Interpretive

6. The price level is determined by the supply of, and demand for, money.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money market MSC: Definitional

7. If the quantity of money supplied is greater than the quantity demanded, then prices should fall.ANS: F DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money market MSC: Analytical

8. Dollar prices and relative prices are both nominal variables.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money

TOP: Nominal variables | Real variables MSC: Definitional

9. The quantity equation is M x V = P x Y.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Quantity equation

MSC: Definitional

10. According to the Fisher effect, if inflation rises then the nominal interest rate rises.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Fisher effect MSC: Definitional

11. An increase in money demand would create a surplus of money at the original value of money.ANS: F DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money market MSC: Applicative

2014

Chapter 30 /Money Growth and Inflation ? 2015

12. Hyperinflations are associated with governments printing money to finance expenditures.

ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: Unemployment and inflation TOP: Hyperinflation MSC: Definitional

13. For a given level of money and real GDP, an increase in velocity would lead to an increase in the price level.ANS: T DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Velocity of money MSC: Analytical

14. The quantity theory of money can explain hyperinflations but not moderate inflation.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Hyperinflation MSC: Interpretive

15. If P represents the price of goods and services measured in money, then 1/P is the value of money measured in

terms of goods and services.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money | Value MSC: Interpretive

16. When the value of money is on the vertical axis, an increase in the price level shifts money demand to the

right.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money demand MSC: Applicative

17. The money supply curve shifts to the left when the Fed buys government bonds.ANS: F DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money supply MSC: Analytical

18. When the value of money is on the vertical axis, the money supply curve slopes upward because an increase in

the value of money induces banks to create more money.ANS: F DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money supply MSC: Definitional

19. If the Fed increases the money supply, the equilibrium value of money decreases and the equilibrium price

level increases.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Money market MSC: Analytical

20. A rising price level eliminates an excess supply of money.ANS: T DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money MSC: Analytical

TOP: Money market

21. A rising value of money eliminates an excess supply of money.ANS: F DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money MSC: Analytical

TOP: Money market

22. Nominal GDP measures output of final goods and services in physical terms.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Nominal variables MSC: Interpretive

2016 ? Chapter 30 /Money Growth and Inflation

23. The classical dichotomy is useful for analyzing the economy because in the long run nominal variables are

heavily influenced by developments in the monetary system, and real variables are not.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Classical dichotomy MSC: Definitional

24. The irrelevance of monetary changes for real variables is called monetary neutrality. Most economists accept

monetary neutrality as a good description of the economy in the long run, but not the short run.ANS: T DIF: 2 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Monetary neutrality MSC: Interpretive

25. The quantity theory of money implies that if output and velocity are constant, then a 50 percent increase in the

money supply would lead to less than a 50 percent increase in the price level.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Quantity theory MSC: Applicative

26. The source of all four classic hyperinflations was high rates of money growth.ANS: T DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Hyperinflation MSC: Definitional

27. In the long run, an increase in the growth rate of the money supply leads to an increase in the real interest rate,

but no change in the nominal interest rate.ANS: F DIF: 1 REF: 30-1 NAT: Analytic LOC: The role of money TOP: Quantity theory MSC: Definitional

28. Inflation induces people to spend more resources maintaining lower money holdings. The costs of doing this

are called shoeleather costs.ANS: T DIF: 1 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Shoeleather costs of inflation MSC: Definitional

29. Shoeleather costs and menu costs are both costs of anticipated inflation.ANS: T DIF: 1 REF: 30-2 NAT: Analytic LOC: Unemployment and inflation TOP: Shoeleather costs of inflation | Menu costs of inflation MSC: Definitional

30. For a given real interest rate, an increase in the inflation rate reduces the after-tax real interest rate.ANS: T DIF: 2 REF: 30-2 NAT: Analytic LOC: Unemployment and inflation TOP: Inflation | Taxes | Real interest rate MSC: Analytical

31. Inflation necessarily distorts saving when either real interest income or nominal interest income is taxed.ANS: F DIF: 2 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Inflation | Real interest rate MSC: Interpretive

32. Inflation distorts savings when real interest income, rather than nominal interest income, is taxed.ANS: F DIF: 2 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Inflation | Real interest rate MSC: Interpretive

33. Suppose the nominal interest rate is 10 percent; the tax rate on interest income is 28 percent, and the inflation

rate is 6 percent. Then the after-tax real interest rate is -3.2 percent.ANS: F DIF: 2 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Taxes | Real interest rate MSC: Interpretive

Chapter 30 /Money Growth and Inflation ? 2017

34. Suppose the nominal interest rate is 5 percent; the tax rate on interest income is 30 percent, and the after-tax

real interest rate is 0.8 percent. Then the inflation rate is 2.7 percent.ANS: T DIF: 2 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Taxes | Real interest rate MSC: Interpretive

35. If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors.ANS: F DIF: 1 REF: 30-2 NAT: Analytic LOC: The role of money TOP: Wealth redistribution | Inflation MSC: Applicative

36. If inflation is higher than expected, then borrowers make nominal interest payments that are less than they

expected.ANS: F DIF: 2 REF: 30-2 NAT: Analytic LOC: Unemployment and inflation TOP: Menu costs of inflation MSC: Applicative

37. Inflation is costly only if it is unanticipated.ANS: F DIF: 1 REF: 30-2 NAT: Analytic LOC: Unemployment and inflation MSC: Interpretive

TOP: Inflation costs

38. Even though monetary policy is neutral in the short run, it may have profound real effects in the long run.ANS: F DIF: 1 REF: 30-3 NAT: Analytic LOC: The role of money TOP: Monetary neutrality MSC: Interpretive

SHORT ANSWER

1. Why did farmers in the late 1800s dislike deflation?ANS:

Most had large nominal debts. The decrease in the price level meant that they received less for what they produced and so made it harder to pay off the debts whose real value rose as prices fell.

DIF: 2 REF: 30-1 LOC: The role of money 2.

NAT: Analytic

TOP: Deflation

MSC: Analytical

Explain the adjustment process in the money market that creates a change in the price level when the money supply increases.ANS:

When the money supply increases, there is an excess supply of money at the original value of money. After the money supply increases, people have more money than they want to hold in their purses, wallets and checking accounts. They use this excess money to buy goods and services or lend it out to other people to buy goods and services. The increase in expenditures causes prices to rise and the value of money to fall. As the value of money falls, the quantity of money people want to hold increases so that the excess supply is eliminated. At the end of this process the money market is in equilibrium at a higher price level and a lower value of money.

DIF: 2 REF: 30-1 LOC: The role of money MSC: Analytical

NAT: Analytic

TOP: Money market

2018 ? Chapter 30 /Money Growth and Inflation

3.

Suppose the Fed sells government bonds. Use a graph of the money market to show what this does to the value

of money.ANS:

When the Fed sells government bonds, the money supply decreases. This shifts the money supply curve from MS1 to MS2 and makes the value of money increase. Since money is worth more, it takes less to buy goods with it, which means the price level falls.

DIF: 2 REF: 30-1 LOC: The role of money MSC: Analytical

NAT: Analytic

TOP: Money market

4.

Using separate graphs, demonstrate what happens to the money supply, money demand, the value of money, and the price level if:

a. the Fed increases the money supply.

b. people decide to demand less money at each value of money.

ANS:

a.

The Fed increases the money supply. When the Fed increases the money supply, the money supply curve shifts right from MS1 to MS2. This shift causes the value of money to fall, so the price level rises. b. People decide to demand less money at each value of money. Since people want to hold less at each

value of money, it follows that the money demand curve will shift to the left from MD1 to MD2. The decrease in money demand results in a lower value of money and so a higher price level.

DIF: 2 REF: 30-1 LOC: The role of money MSC: Analytical

NAT: Analytic

TOP: Money market

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