Question : 11) In the long run, when the Fed increases the : 1227861

11) In the long run, when the Fed increases the quantity of money, the

A) price level rises.

B) nominal interest rate falls.

C) demand for money decreases.

D) price level falls.

E) real interest rate rises.

12) In the long run, an increase in the quantity of money leads to

A) an equal percentage increase in the real interest rate.

B) a smaller percentage increase in the real interest rate.

C) an equal percentage increase in the price level.

D) a smaller percentage increase in the price level.

E) no effect on the price level or on real GDP.

13) In the long run, an increase in the quantity of money, other things remaining the same,

A) increases the price level.

B) decreases the price level.

C) increases real GDP.

D) decreases real GDP.

E) has no effect on the price level or real GDP.

14) Other things remaining the same, in the long run ________ in the quantity of money brings an equal percentage ________.

A) an increase; decrease in the price level

B) a decrease; decrease in the price level

C) a decrease; increase in the price level

D) a decrease; increase in the nominal interest rate

E) an increase; increase in the real interest rate

15) The proposition that in the long run when real GDP equals potential GDP, an increase in the quantity of money leads to an equal percentage increase in the price level is the called the quantity theory of

A) constant velocity.

B) inflation.

C) money.

D) equal change.

E) the long run.

16) When real GDP equals potential GDP, the quantity theory of money says that an increase in the quantity of money brings an equal percentage

A) increase in the price level.

B) increase in real GDP.

C) decrease in the price level.

D) decrease in velocity.

E) decrease in real GDP.

17) Using the quantity theory of money, in the long run a 3 percent increase in the quantity of money leads to a 3 percent

A) increase in the price level.

B) increase in the real interest rate.

C) decrease in the price level.

D) decrease in the real interest rate.

E) increase in real GDP.

18) The average number of times in a year each dollar is used to buy goods and service is called

A) velocity of circulation.

B) inflation.

C) circulation rate.

D) nominal GDP.

E) rate of circulation speed.

19) The “velocity of circulation” refers to the

A) ratio between the quantity of money and the price level.

B) average number of times in a year each dollar is used to buy goods and services.

C) average number of times a dollar is deposited and withdrawn from a bank account.

D) average speed with which the Fed increases or decreases the quantity of money.

E) average speed with which the nominal interest rate changes when the inflation rate changes.

20) The velocity of circulation is defined as the

A) average number of times in a year that each dollar is used to buy goods and services.

B) quantity of money supplied by the Fed.

C) quantity of money demanded at equilibrium.

D) price level obtained when the money market is at its equilibrium.

E) speed with which changes in the interest rate spread throughout the economy.