Chapter 22 Self-test questions

* not completed

Inflation that is caused only by factors that can be influenced by monetary policy is called _____

Augmented inflation correct incorrect

Secondary inflation correct incorrect

Core inflation correct incorrect

Reduced inflation correct incorrect

* not completed

The printing press finance concept implies that ______

Central banks will print new money to meet customer's demand for cash balances. correct incorrect

Printing presses raise capital to inject into their businesses correct incorrect

Shares of printing presses rise correct incorrect

Printing presses are tasked to print a country's currency correct incorrect

* not completed

One way to correct a situation of serious hyperinflation is to _____

Replace the monetary unit with a new one correct incorrect

Not do anything since there's an automatic adjustment correct incorrect

Make price increases illegal correct incorrect

Nationalise firms correct incorrect

* not completed

If inflation can be fully predicted, there will be no real wealth effect because ___

We can increase money supply to compensate the losers correct incorrect

We can increase nominal interest rates by the amount of the expected inflation so that it exceeds the desired real rate. correct incorrect

We can avoid the inflation correct incorrect

We can refuse to lend money correct incorrect

* not completed

Which of the following is a primary objective of central banks when adopting the inflation targeting framework?

To attain the lowest possible rate of inflation correct incorrect

To boost public confidence in the central bank's determination to keep inflation within a certain target correct incorrect

To avoid the pitfalls of pegging the country's currency to another currency correct incorrect

To boost growth correct incorrect

* not completed

When consumers are convinced that the lower import prices will end soon _______

They will bargain for even lower prices correct incorrect

They will hoard the goods correct incorrect

Current consumption of imports will drop correct incorrect

Their purchases of imported goods will rise sharply correct incorrect

* not completed

An income effect can result from the balance-of-payments effect of an unanticipated inflation when ______

Wages fall due to increasing import prices correct incorrect

Prices of imports with inelastic demand rise correct incorrect

People choose to save instead of consume correct incorrect

None of the above correct incorrect

* not completed

Price-setting firms will often respond to changes in demand conditions by _____

Changing prices to take advantage of increased demand even when input prices have not changed correct incorrect

Varying output but not their prices if input prices remain unchanged correct incorrect

Restricting demand to cause shortage correct incorrect

Maintaining output levels as input prices have not changed correct incorrect

* not completed

Disinflation simply refers to ______

hyperinflation correct incorrect

Negative inflation correct incorrect

Low inflation correct incorrect

Stagflation minus inflation correct incorrect

* not completed

When a firm can control the price of its product but not its demand curve, it is _______.

Price setting firm correct incorrect

Price taker correct incorrect

A state owned firm correct incorrect

unprofitable correct incorrect