A) inflation.
B) recessions.
C) economic recoveries.
D) expansions.
Answer: B
Ques Status: Previous Edition
4) During a recession, output declines resulting in
A) lower unemployment in the economy.
B) higher unemployment in the economy.
C) no impact on the unemployment in the economy.
D) higher wages for the workers.
Answer: B
Ques Status: New
5) Prior to all recessions since 1900, there has been a drop in
A) inflation.
B) the money stock.
C) the growth rate of the money stock.
D) interest rates.
Answer: C
Ques Status: Previous Edition
6) Evidence from business cycle fluctuations in the United States indicates that
A) a negative relationship between money growth and general economic activity exists.
B) recessions have been preceded by declines in share prices on the stock exchange.
C) recessions have been preceded by dollar depreciation.
D) recessions have been preceded by a decline in the growth rate of money.
Answer: D
Ques Status: Previous Edition
7) ________ theory relates changes in the quantity of money to changes in aggregate economic
activity and the price level.
A) Monetary
B) Fiscal
C) Financial
D) Systemic
Answer: A
Ques Status: Previous Edition
8) A sharp increase in the growth of the money supply is likely followed by
A) a recession.
B) a depression.
C) an increase in the inflation rate.
D) no change in the economy.
Answer: C
Ques Status: Previous Edition
9) It is true that inflation is a
A) continuous increase in the money supply.
B) continuous fall in prices.
C) decline in interest rates.
D) continually rising price level.
Answer: D
Ques Status: Previous Edition
10) Which of the following is a true statement?
A) Money or the money supply is defined as Federal Reserve notes.
B) The average price of goods and services in an economy is called the aggregate price level.
C) The inflation rate is measured as the rate of change in the federal government budget
deficit.
D) The aggregate price level is measured as the rate of change in the inflation rate.
Answer: B
Ques Status: Previous Edition
11) If ten years ago the prices of the items bought last month by the average consumer would have
been much higher, then one can likely conclude that
A) the aggregate price level has declined during this ten-year period.
B) the average inflation rate for this ten-year period has been positive.
C) the average rate of money growth for this ten-year period has been positive.
D) the aggregate price level has risen during this ten-year period.
Answer: A
Ques Status: Previous Edition
12) From 1950-2008 the price level in the United States increased more than ________.
A) twofold
B) threefold
C) sixfold
D) ninefold
Answer: C
Ques Status: Revised
13) Complete Milton Friedmanʹs famous statement, ʺInflation is always and everywhere a ________
phenomenon.ʺ
A) recessionary
B) discretionary
C) repressionary
D) monetary
Answer: D
Ques Status: Previous Edition
14) There is a ________ association between inflation and the growth rate of money ________.
A) positive; demand
B) positive; supply
C) negative; demand
D) negative; supply
Answer: B
Ques Status: New
15) Evidence from the United States and other foreign countries indicates that
A) there is a strong positive association between inflation and growth rate of money over long
periods of time.
B) there is little support for the assertion that ʺinflation is always and everywhere a monetary
phenomenon.ʺ
C) countries with low monetary growth rates tend to experience higher rates of inflation, all
else being constant.
D) money growth is clearly unrelated to inflation.
Answer: A
Ques Status: Previous Edition
16) Countries that experience very high rates of inflation may also have
A) balanced budgets.
B) rapidly growing money supplies.
C) falling money supplies.
D) constant money supplies.
Answer: B
Ques Status: Revised
17) Between 1950 and 1980 in the U.S., interest rates trended upward. During this same time period,
A) the rate of money growth declined.
B) the rate of money growth increased.
C) the government budget deficit (expressed as a percentage of GNP) trended downward.
D) the aggregate price level declined quite dramatically.
Answer: B
Ques Status: Previous Edition
18) The management of money and interest rates is called ________ policy and is conducted by a nationʹs ________ bank.
A) monetary; superior
B) fiscal; superior
C) fiscal; central
D) monetary; central
Answer: D
Ques Status: Previous Edition
19) The organization responsible for the conduct of monetary policy in the United States is the
A) Comptroller of the Currency.
B) U.S. Treasury.
C) Federal Reserve System.
D) Bureau of Monetary Affairs.
Answer: C
Ques Status: Previous Edition
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