Chapter 14

Question 1

The simple quantity theory of money predicts that changes in the money supply

Answer 1

Lead to strictly proportional changes in the price level

Question 2

The simple quantity theory predicts that the money supply rises by 10% then the price level rises by

Answer 2

10%

Question 3

Monetarist a believe that

Answer 3

Real GDP is not determined by M in the long run

Question 4

An increase in the money supply leads to an increase in expected inflation is a _______ effect

Answer 4

Expectations effect

Question 5

According to the simple quantity theory of money in the ADAS framework, when the money supply falls the result is _________ in real GDP and _______ in the price level

Answer 5

No change, a fall

Question 6

According to the simple quantity theory of money, an increase in the money supply will shift the ______ curve to the right and raise _________

Answer 6

AD, the price level

Question 7

When the Fed conducts an open market operations, the impact of the buying or selling of bonds will include changes in

Answer 7

Interest rates

Question 8

Based upon the equation of exchange, what brings about inflation?

Answer 8

An increase in money supply

Question 9

In the equation of exchange, Q stands for

Answer 9

Real GDP