Question :
11) If ten years ago the prices of the items : 1373623
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.
12) From 1950-2008 the price level in the United States increased more than ________.
A) twofold
B) threefold
C) sixfold
D) ninefold
13) Complete Milton Friedman’s famous statement, “Inflation is always and everywhere a ________ phenomenon.”
A) recessionary
B) discretionary
C) repressionary
D) monetary
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
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 “inflation is always and everywhere a monetary phenomenon.”
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.
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.
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.
18) The management of money and interest rates is called ________ policy and is conducted by a nation’s ________ bank.
A) monetary; superior
B) fiscal; superior
C) fiscal; central
D) monetary; central
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.
20) ________ policy involves decisions about government spending and taxation.
A) Monetary
B) Fiscal
C) Financial
D) Systemic
21) When tax revenues are greater than government expenditures, the government has a budget ________.
A) crisis
B) deficit
C) surplus
D) revision
22) A budget ________ occurs when government expenditures exceed tax revenues for a particular time period.
A) deficit
B) surplus
C) surge
D) surfeit
23) Budgets deficits can be a concern because they might
A) ultimately lead to higher inflation.
B) lead to lower interest rates.
C) lead to a slower rate of money growth.
D) lead to higher bond prices.
24) Budget deficits are important because deficits
A) cause bank failures.
B) always cause interest rates to fall.
C) can result in higher rates of monetary growth.
D) always cause prices to fall.
25) What happens to economic growth and unemployment during a business cycle recession? What is the relationship between the money growth rate and a business cycle recession?
