Chapter 19 Self-test questions

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The classical dichotomy suggests that the ____________ and ____________ sides must be distinguished.

Real, nominal correct incorrect

Fiscal, monetary correct incorrect

Monetary, real correct incorrect

Economic, social correct incorrect

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Money is neutral if ________

There are no real effects on the economy from the absolute values of prices correct incorrect

We cannot determine the owner correct incorrect

It has no value correct incorrect

It is not legal tender correct incorrect

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Under money illusion , the individual ____________

Thinks he/she has more money than is really the case correct incorrect

Responds to changes in prices even though his/her income has also changed in the same direction correct incorrect

Uses counterfeit money correct incorrect

Responds to changes in price by increasing savings correct incorrect

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The following examples belong to categories indicating the different ways we hold wealth except ____________

shares correct incorrect

Interest rates correct incorrect

Bank deposits correct incorrect

bonds correct incorrect

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The current market interest rate and the present value of a bond will be ____________

Positively related correct incorrect

Inversely related correct incorrect

equal correct incorrect

None of the above correct incorrect

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The nominal rate of interest is ____________

Equal to inflation correct incorrect

Real rate of interest minus inflation correct incorrect

Usually high correct incorrect

The money rate of interest correct incorrect

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Demand for money refers to ____________

Our desire for wealth correct incorrect

Amount of wealth everyone wishes to hold in the form of money balances correct incorrect

Need for money to meet our problems correct incorrect

None of the above correct incorrect

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If we decide to hold money balances, ____________

We do not have to go to the bank often correct incorrect

We risk losing them in the event of robbery correct incorrect

There is no opportunity cost correct incorrect

We forgo the interests a bond purchase with that money would have generated for us correct incorrect

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Transaction balances are ____________ with GDP

Positively related correct incorrect

Negatively related correct incorrect

equal correct incorrect

None of the above correct incorrect

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Monetary equilibrium implies that ____________

Everyone has money in the economy correct incorrect

Demand and supply for money are equal correct incorrect

Inflation is zero correct incorrect

None of the above correct incorrect