04 Jun Question Question 1 According to the equation of exchange, if total output is 2,000 units, the velocity of money is 5, and the money supply is $1,000, the average price
Question
Question 1
According to the equation of exchange, if total output is 2,000 units, the velocity of money is 5, and the money supply is $1,000, the average price per transaction will be
$0.50
$2.50
$5.00
$7.50
Question 2
The current base year for the CPI is 1985.
True
False
Question 3
If the money supply is $350 and PQ is $1,400, according to the quantity theory of money, the velocity of money is
35.0
7.5
4.0
0.25
Question 4
The higher the reserve requirement,
the more the money supply can expand
the more interest the bank will earn on its reserve account
the less the money supply can expand
both (a) and (b)
Question 5
The current base period for the CPI is
1967
1977
1982–1984
1990
Question 6
In calculating a price index, the period to which prices in all other periods are compared is known as the
comparison period
average period
current period
base period
Question 7
Anything that would cause people to want to hold more of their money as cash and less in the form of checkable deposits would
increase the multiple expansion of the money supply
cause the Federal Reserve to raise the reserve requirement
reduce the multiple expansion of the money supply
increase the size of the money supply
Question 8
Your nominal wages rose during the same period from $200 a week to $260. By how much did your real income rise?
30 percent
16.7 percent
8.33 percent
12 percent
Question 9
Included in the official U.S. money supply are
U.S. government bonds
corporate stocks
checkable deposits
all of the above
Question 10
If a $1,000 cash deposit is made in a bank where the reserve requirement is 10 percent, then the maximum total loans in the form of checkable deposits that may be made as a result of that cash deposit is
$1,000
$5,000
$9,000
$10,000
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