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Chapter 12 Monetary Intertemporal Model
Chapter 12 Monetary Intertemporal Model
Chapter 10
medium of exchange.
B)
store of value.
C)
unit of account.
D)
A
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2)
Use of money to save up for a future cash purchase would be an example of money's role as a
A)
medium of exchange.
B)
store of value.
C)
unit of account.
D)
B
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3)
Price tags attached to goods for purchase at a store would be an example of money's role as a
A)
medium of exchange.
B)
store of value.
C)
unit of account.
D)
C
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4)
A
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5)
The two most common types of money in circulation in the United States today consist of
A)
C
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6)
B
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7)
M0.
B)
M1.
C)
M2.
D)
L.
Answer:
A
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8)
demand deposits
B)
B
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9)
currency (outside the U.S. Treasury, the Federal Reserve, and the vaults of depository institutions)
B)
travelers' checks
C)
demand deposits
D)
savings deposits
Answer:
D
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10)
M1 is M0 plus
A)
bank notes.
B)
saving accounts.
C)
checking accounts.
D)
certificates of deposit.
Answer:
C
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11)
C
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12)
credit markets.
B)
government intervention.
C)
C
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13)
The Fisher relationship may be described by the following equation in which R is the nominal rate of
interest, r is the real rate of interest, and i is the inflation rate.
A)
i=r+R
B)
1+ r
1+i=
(1 + R )
C)
1+ i
1+r=
(1 + R)
D)
1+ r
1+r=
1+ i
Answer:
D
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14)
0.
B)
-r.
C)
-i.
D)
-R.
Answer:
C
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15)
zero.
B)
D
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16)
To determine the real interest rate in the data, one should take the interest rate on Treasury bonds
A)
New
17)
The most significant problem in trying to empirically measure the real rate of interest is that
A)
B
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18)
currency in arrears.
B)
cash in advance.
C)
consumption-investment allocation.
Answer:
B
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19)
households obtain money transfers from the government at the start of the period.
Answer:
B
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20)
Without the cash-in-advance constraint, money would not be held by households in the intertemporal
model with money because
A)
We cannot tell.
Answer:
C
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21)
Without the cash-in-advance constraint, money would not be held by firms in the intertemporal model
with money because
A)
We cannot tell.
Answer:
C
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22)
A model in which some goods must be purchased with cash on hand is called a
A)
monetary model.
B)
cash-in-advance model.
C)
B
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23)
A household uses banking services until the marginal cost of banking services equals
A)
zero.
Answer:
C
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24)
B
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25)
C
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26)
C
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27)
A
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28)
B
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29)
C
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30)
D
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31)
of Ricardian equivalence.
D)
money is neutral.
Answer:
B
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32)
endogenous.
B)
determined by policy.
C)
irrelevant.
D)
indeterminate.
Answer:
B
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33)
C
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34)
issues coins.
C)
collects taxes.
D)
A
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35)
A central bank is
A)
C
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36)
To increase the nominal money supply, the government may do any of the following except
A)
reduce the quantity of government bonds, with no change in either government spending or taxes.
D)
temporarily increase government spending, with no change in either taxes or the quantity of government
bonds.
Answer:
B
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37)
increasing taxes.
B)
decree.
Answer:
B
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38)
irresponsible.
B)
an open-market purchase.
C)
sterilization.
D)
seigniorage.
Answer:
D
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39)
a tax on transactions.
B)
issuance of money.
D)
lump-sum taxation.
Answer:
C
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40)
C
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41)
a swap.
B)
a bond roll-over.
D)
bonding.
Answer:
B
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42)
If an increase in the level of the money supply results in a proportionate increase in prices with no effect
on any real variables, we say that
A)
money is neutral.
C)
money is superneutral.
D)
B
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43)
it is a barter economy.
Answer:
C
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44)
B
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45)
In a model with money neutrality, a 10% increase in the money supply leads to an increase of output by
A)
10%.
C)
zero.
Answer:
D
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46)
In a model with money neutrality, a 10% increase in the money supply leads to an increase of prices by
A)
10%.
C)
zero.
Answer:
B
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47)
money is superneutral.
B)
D
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48)
zero.
D)
D
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49)
If an increase in the level of money supply leads to a proportionate increase in prices with no effect on
real variables ,we say that
A)
money is neutral.
C)
money is superneutral.
D)
B
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50)
In the intertemporal monetary model, the effects of a temporary decrease in total factor productivity
include
A)
A
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51)
With money supply shocks in the intertemporal model with money, the price level is
A)
procyclical.
B)
acyclical.
C)
countercyclical.
D)
somewhat cyclical.
Answer:
B
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52)
The cash-in-advance model with temporary total factor productivity shocks replicates which stylized
fact?
A)
acyclical investment
C)
countercyclical prices
Answer:
D
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53)
In the intertemporal monetary model, the effects of an increase in the cost of converting other assets into
money include
A)
an increase in prices.
D)
a decrease in prices.
Answer:
C
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54)
An important potential problem for a central bank that wishes to stabilize the price level is the inability of
the central bank to
A)
predict shifts in the money demand function and to immediately observe changes in output and prices.
D)
predict shifts in the money supply and to immediately observe changes in output and prices.
Answer:
C
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55)
The conventional wisdom is that a central bank should target an inflation rate of
A)
-2 to -4%.
B)
around 0%.
C)
1% to 3%.
D)
3% to 5%.
Answer:
C
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56)
In the monetarist approach to monetary policy, the Federal Reserve should set a target for
A)
A
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57)
D
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58)
B
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59)
it allows the central bank to get a close fit to inflation forecasts, like a taylor fits a dress.
C)
C
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60)
D
Question
Status:
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