question
The higher the price level, the ....... money the typical transaction requires, and the ..... money people will with to hold in the form of currency
answer
more, more
question
the fed increases money supply by .....
answer
buying bonds from the public
question
expansion in money supply will ....... people's demand for goods and services.
answer
increase
question
in the long-run, by increasing the moeny supply, since your ability to produce goods and services hasn't changed, the prices will ... and the value of money will ...
answer
rise, fall
question
nominal vs real variables
answer
nominal: measured in monetary units. anything that has a price on it
real: measured in physical units. anything priced relatively to another good. ex: 1 kumquat = 2 comic books
real: measured in physical units. anything priced relatively to another good. ex: 1 kumquat = 2 comic books
question
relative price
answer
book = $4 kumquat = $2
1 kumquat = 1/2 book <- relative price
1 kumquat = 1/2 book <- relative price
question
monetary neutrality
answer
proposition that a change in the money supply affects NOMINAL variables.
question
inflation tax
answer
when government pays its debts by printing money
question
menu costs of inflation
answer
cost associated with changing price tags, price lists, website content, catalogs, menus, etc.
question
a HIGHER inflation rate will ........ the after-tax real interest rate when the government taxes NOMINAL interest income. This tends to ........ saving, thereby ....... the quantity of investment in the economy and ........ the economy's long run growth rate
answer
reduce, discourage, reducing, reducing
question
unanticipated change in inflation arbitrarily benefits.....
answer
borrowers
question
Fisher Effect
answer
long-run behavior of nominal interest rates and inflation based on monetary neutrality
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
