‎⁨24تست نقدية - 230517 - 140458⁩

The Economics of Money, Banking, and
Financial Markets, 9e (Mishkin)
Chapter 24 Money and Inflation
24.1 Money and Inflation: Evidence
1) The condition of a continually rising

price level is defined as
A) stagflation.
B) stagnation.
C) disinflation.
D) inflation.
Answer: D
Ques Status: Previous Edition
2) The economist who proposed that,

"Inflation is always and everywhere a
monetary
phenomenon" was
A) John Maynard Keynes.

B) John R. Hicks.
C) Milton Friedman.
D) Franco Modigliani.
Answer: C
3) Complete Milton Friedman's famous

proposition: "Inflation is always and
everywhere a
________ phenomenon."
A) monetary
B) political
C) policy
D) budgetary
Answer: A
4) At first cut, the simple solution to

fighting inflation is
A) reducing the growth rate of the money

supply.
B) limiting the number of terms that

politicians can serve in elective office.
C) returning the economy to barter by

prohibiting the use of fiat money.
D) to impose price controls on

businesses that attempt to raise prices.
Answer: A
5) "How do we prevent the inflationary

fire from igniting again and stop the roller
coaster ride in
the inflation rate of the last 40 years?"

Milton Friedman's famous proposition
suggests the simple
solution:
A) reduce the number of terms that

politicians are allowed to serve.
B) reduce the growth rate of the money

supply.
C) reduce the marginal tax rate on low-
income wage earners.
D) increase the marginal tax rates on

businesses that hike prices in excess of
5 percent per year.
Answer: B

6) Milton Friedman's proposition
concerning the cause of inflation implies
a simple solution to
the inflation problem:
A) reduce government budget deficits.
B) limit the ability of fiscal policymakers

to bring pressure to bear on the
monetary authority.
C) limit the number of terms that

politicians are allowed to serve.
D) reduce the growth rate of the money

supply.
Answer: D
7) Milton Friedman's proposition that

inflation is always and everywhere a
monetary
phenomenon holds only if
A) government budget deficits do not rise

continually.
B) the unemployment rate does not rise

continually.
C) the price level rises continually.
D) the United States does not

experience more than one negative
supply shock per decade.
Answer: C
8) Inflation occurs whenever
A) the price level rises.
B) the money supply increases.
C) the price level rises continuously over

a period of time.
D) the price level falls continuously over

a period of time.
Answer: C
9) Evidence strongly supports the view

that countries with high inflation also
have
A) the lowest nominal interest rates.
B) the highest rates of money growth.
C) the smallest budget deficits.
D) the lowest interest rates.
Answer: B
10) Countries with the highest inflation

rates are likely to have
A) the highest rates of money growth.
B) small budget deficits relative to GDP.

C) the lowest interest rates.
D) nonaccommodating monetary policy.
Answer: A
11) The proposition that inflation is the

result of a high rate of money growth is
A) not supported by evidence from the
German hyperinflation.
B) held only by sociologists and is no

longer believed by economists.
C) supported by evidence from

inflationary episodes throughout the
world.
D) largely a political fabrication designed

to make the Fed a scapegoat for poor
fiscal policy.
Answer: C
12) Which of the following would provide

the strongest evidence that rapid money
growth is the
driving force behind inflation?
A) An endogenous increase in the

money supply that preceded the onset of
inflation.
B) An exogenous increase in the money

supply that preceded the onset of
inflation.
C) An endogenous increase in the

money supply that lagged the onset of
inflation.
D) An exogenous increase in the money

supply that lagged the onset of inflation.
Answer: B

13) The Zimbabwean hyperinflation of
2008 supports the proposition that
excessive monetary
growth causes inflation and not the other
way around since the increase in
monetary growth
appears to have been
A) unintentional.
B) intentional.
C) endogenous.
D) exogenous.
Answer: D
Ques Status: Revised
14) The German hyperinflation of 1921-

1923 provides important support for
the view that high
money growth results when
A) the government sets an employment

target that is too high.
B) the government expands the money

supply to finance its expenditures.
C) the government raises taxes to

finance its expenditures.
D) the government sells bonds to the

public.
Answer: B
24.2 Meaning of Inflation
1) A one-time increase in the price level
A) is rarely reported by the news media

as inflation, but is nevertheless
considered to be inflation
by economists.
B) is regularly reported by the news

media as inflation, but is not considered
to be inflation by
economists.
C) is rarely reported by the news media

as inflation because it is not considered
to be inflation by
economists.
D) is regularly reported by the news

media as inflation because it is
considered to be inflation by
economists.
Answer: B
2) When inflation is defined to be a

condition of a continually rising price
level, ________
economists agree with Milton Friedman's

proposition that inflation is a monetary
phenomenon.
A) no
B) very few
C) about half of practicing
D) almost all
Answer: D
Views of Inflation
1) According to aggregate demand and

supply analysis, inflation is caused by
A) supply shocks.
B) expansionary fiscal policies.
C) expansionary monetary policies.
D) rising prices.
Answer: C

supply analysis, a continually increasing
money supply
causes a ________ in aggregate

demand,
everything else held constant.
A) continual increase
B) continual decrease
C) one-time increase
D) one-time decrease
Answer: A

supply analysis of inflation and with
everything else held
constant, a continually increasing money

supply causes
A) aggregate demand to increase along

a stationary aggregate supply curve,
leading
to
continually increasing aggregate output

and prices.
B) aggregate supply to decrease along a

stationary aggregate demand curve,
leading to
continually contracting aggregate output

and prices.
C) aggregate demand to increase

continually as aggregate supply
decreases continually, leading
to higher and higher price levels.
D) aggregate demand to decrease

continually as aggregate supply
increases continually, leading
to higher and higher price levels.
Answer: C
4) Aggregate demand and supply

analysis conclude that continuously
growing ________ will
cause the price level to rise continually,

thus generating inflation.
A) money supply
B) government spending
C) interest rates
D) consumer expenditure
Answer: A

supply analysis and with everything else
held constant, a
continuous increase in the money supply

causes
A) the price level to increase, but has no

lasting effect on the inflation rate.
B) the price level to fall.
C) inflation.
D) output to increase, but leaves the

price level and inflation unchanged.
Answer: C

supply analysis, an increase in
government spending will
cause aggregate demand to ________,

causing output to ________ , everything
else held
constant.
A) increase; fall
B) increase; rise
C) decrease; fall
D) decrease; rise
Answer: B
7) Aggregate demand and supply

analysis indicates that negative supply
shocks
A) decrease the price level, but cannot

decrease the inflation rate.
B) increase the price level, but cannot

increase the inflation rate.
C) increase both the price level and the

inflation rate.
D) decrease both the price level and the

inflation rate.
Answer: B
8) Suppose that the economy is at the

natural rate of output. In the absence of
accommodating
policy and everything else held constant,

the net result of a negative supply shock
is that
A) the economy returns to full
employment at the initial price level.
B) the economy returns to full

employment at a higher price level.
C) the economy returns to full

employment at a lower price level.
D) aggregate output increases above the

natural rate level, but only temporarily.
Answer: A
24.4 Origins of Inflationary Monetary
Policy
1) To say that inflation is a monetary

phenomenon seems to beg the question:
A) Why does inflationary monetary policy

occur?
B) Why do politicians seek reelection?
C) Why is the Fed independent?
D) Why does the U.S. Treasury print so

much money?
Answer: A
2) The combination of a successful wage

push by workers and the government's
commitment to
high employment leads to
A) demand-pull inflation.
B) supply-side inflation.
C) supply-shock inflation.
D) cost-push inflation.
Answer: D
3) If the Fed responds by increasing the

money supply in response to a
successful wage push by
workers, monetary policy is said to be
A) accomplishing.
B) nonaccommodating.
C) nonaccomplishing.
D) accommodating.
Answer: D
4) If workers do not believe that

policymakers are serious about fighting
inflation, they are most
likely to push for higher wages, which will

________ aggregate ________ and lead
to
unemployment or inflation or both,

everything else held constant.
A) decrease; demand
B) increase; demand
C) decrease; supply
D) increase; supply
Answer: C
5) Workers will have greater incentives

to push for higher wages when
government policymakers
place greater concern on ________ than

________ and are thus ________ likely
to adopt
accommodative policies.
A) inflation; unemployment; less
B) inflation; unemployment; more
C) unemployment; inflation; less

D) unemployment; inflation; more
Answer: D
14) Advocates of discretionary policy

usually view ________ policy as having
a longer
effectiveness lag than ________ policy,
but
there is substantial uncertainty about
how long this
lag is.
A) fiscal; incomes
B) fiscal; monetary
C) monetary; incomes
D) monetary; fiscal
Answer: D
15) Economists usually view ________

policy as having a shorter
implementation lag than
________ policy, but there is substantial
uncertainty about how long this lag is.
A) fiscal; incomes
B) fiscal; monetary
D) monetary; fiscal
Answer: D
16) Economists usually view ________

policy as having a longer implementation
lag than
________ policy, but there is substantial

uncertainty about how long this lag is.
A) fiscal; incomes
B) fiscal; monetary
D) monetary; fiscal
Answer: B
17) If output adjusts ________ to the

natural rate level, and if time lags
between policy actions
and changes in aggregate output are

relatively ________, then the case for
discretionary policy is
strengthened.
A) slowly; short
B) slowly; long
C) quickly; short
D) quickly; long
Answer: A
18) If output adjusts ________ to the

natural rate level, and if time lags
between policy actions
and changes in aggregate output are

relatively ________, then the case for
discretionary policy is
weakened.
A) slowly; short
B) slowly; long
C) quickly; short
D) quickly; long
Answer: D
18
19) Advocates of nondiscretionary policy
contend that a discretionary policy of
shifting the
aggregate ________ curve will be costly

because it produces ________ volatility
in both the
price level and output.

A) supply; less
B) supply; more
C) demand; less
D) demand; more
Answer: D
20) Some economists contend that a

policy of shifting the aggregate demand
curve will be costly
because it produces more volatility in

both the price level and output. These
economists likely
are advocates of ________ policy.
A) supply-side
B) discretionary
C) demand-management
D) nondiscretionary
Answer: D
21) The existence of lags prevents the

instantaneous adjustment of the
economy to policies
changing aggregate demand, thereby

strengthening the case for ________
policy.
A) supply-side
B) nondiscretionary
C) discretionary
D) demand-management
Answer: B
22) Which of the following views are

consistent with the case for
nondiscretionary
macroeconomic policy?
A) Even with time lags, discretionary

policy moves the economy to full
employment before the
economy's self-correcting mechanism
would.
B) The wage and price adjustment

process being extremely slow, a
nondiscretionary policy
results in a large loss of output.
C) Workers will come to expect

expansionary policies whenever the
economy moves below full
employment.
D) A discretionary, accommodating
policy of shifting the aggregate demand
curve will produce
less volatility in both the price level and

output due to the short time it takes to
shift aggregate
demand.
Answer: C
23) If expectations about policy affect

how wages are set, then the case for
a(n) ________ policy
is much stronger.
A) discretionary
B) nondiscretionary
C) interventionist
D) stabilization
Answer: B

emphasize the importance of a constant
money growth
rate rule more than the balanced-budget

amendment or restrictions on union
power because
A) they regard excessive money growth

as the cause of inflation.
B) they believe that excessive

government spending, not excessive
monetary growth, is the cause
of inflation.
C) they believe that while unions cause
inflation, they are too politically powerful
to deal with.
D) they regard high tax rates as the

cause of inflation.
Answer: A

contend that a policy of shifting the
aggregate demand
curve will be costly because it produces

more volatility in both the price level and
output. Thus
they favor
A) a policy of variable money supply
growth.
B) supply-side policy.
C) demand-management policy.
D) a constant-money-growth-rate rule.
Answer: D
26) A credible, nonaccommodating

policy rule has the ________ that it
makes a cost-push by
workers ________ likely and thus helps

to reduce the output loss from controlling
inflation.
A) advantage; less
B) advantage; more
C) disadvantage; less
D) disadvantage; more
Answer: A
27) Suppose the economy is at the

natural rate of output. Explain how a tax
increase reduces
demand and increases unemployment.

Why is the speed of the adjustment of
wages and/or the
role of expectations important in this
situation?
Answer: The tax increase decreases

aggregate demand. Output falls below
the natural rate,
increasing unemployment. If wages are

slow to adjust, the economy remains
below the natural
rate for a long time, but adjustment back

to the natural rate is rapid if wages adjust
quickly or if
expectations lead to rapid adjustment of

wages.

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The Economics of Money, Banking, and

Financial Markets, 9e (Mishkin)

Chapter 24 Money and Inflation

24.1 Money and Inflation: Evidence

1) The condition of a continually rising

Ques Status: Previous Edition

2) The economist who proposed that,

A) John Maynard Keynes.

Ques Status: Previous Edition

3) Complete Milton Friedman's famous

Ques Status: Previous Edition

4) At first cut, the simple solution to

A) reducing the growth rate of the money

B) limiting the number of terms that

C) returning the economy to barter by

D) to impose price controls on

Ques Status: Previous Edition

5) "How do we prevent the inflationary

the inflation rate of the last 40 years?"

A) reduce the number of terms that

B) reduce the growth rate of the money

D) increase the marginal tax rates on

Ques Status: Previous Edition

the inflation problem:

A) reduce government budget deficits.

B) limit the ability of fiscal policymakers

C) limit the number of terms that

D) reduce the growth rate of the money

7) Milton Friedman's proposition that

phenomenon holds only if

A) government budget deficits do not rise

B) the unemployment rate does not rise

C) the price level rises continually.

D) the United States does not

Ques Status: Previous Edition

8) Inflation occurs whenever

A) the price level rises.

B) the money supply increases.

C) the price level rises continuously over

D) the price level falls continuously over

Ques Status: Previous Edition

9) Evidence strongly supports the view

A) the lowest nominal interest rates.

B) the highest rates of money growth.

C) the smallest budget deficits.

D) the lowest interest rates.

Ques Status: Previous Edition

10) Countries with the highest inflation

A) the highest rates of money growth.

B) small budget deficits relative to GDP.

D) nonaccommodating monetary policy.

11) The proposition that inflation is the

B) held only by sociologists and is no

C) supported by evidence from

D) largely a political fabrication designed

Ques Status: Previous Edition

12) Which of the following would provide

A) An endogenous increase in the

B) An exogenous increase in the money

C) An endogenous increase in the

D) An exogenous increase in the money

Ques Status: Previous Edition

appears to have been