Transcript Parkin_Macro_9e_clicker_ch08

Chapter 8: Money, the Price Level, and Inflation
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Which of the following is an example of money
functioning as a store of value?
A. Comcast charging $99 for internet, phone
and cable service.
B. McDonalds charging 99 cents for a burger.
C. Your saving your spare change in a jar in
order to afford an end -of-term party.
D. Amazon.com charging $9.95 for shipping.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Bank reserves include
I. the cash in the bank’s vault
II. the bank’s deposits at the Federal Reserve
A.
B.
C.
D.
only I
only II
both I and II
neither I nor II
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Which of the following allow banks to minimize
the cost to a business of borrowing?
I. Borrowing long and lending short.
II. Raising funds from a large number of
depositors.
III. Creating money by lending all their reserves.
A.
B.
C.
D.
I only
II only
I and III
II and III
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
As a “central bank,” which of the following is
true regarding the Fed?
I. The Fed is a public authority that regulates
the nation’s banks.
II. The Fed is not allowed to provide services to
commercial banks like Citibank.
III. The Fed is required to provide banking
services to private citizens.
A.
B.
C.
D.
I only
II only
I and II
I and III
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
In August 2007, Sun Trust Bank has $83 million
in loans and $114 million in M1 deposits. If Sun
Trust is holding $4 million in reserves, the
bank’s reserve ratio is
A.
B.
C.
D.
$31 million.
4.8 percent
3.5 percent.
72.8 percent.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
If a customer deposits $10,000 in currency into
a checking account, the bank’s total
reserves________.
A.
B.
C.
D.
Increase
do not change
are greater than 100 percent
decrease
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Suppose that the money multiplier is 3. If the
monetary base increases by $1 million, the
quantity of money will
A.
B.
C.
D.
increase by $3 million.
increase by $300,000.
decrease by $3 million.
decrease by $300,000.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
The quantity of money that people choose to
hold depends on which of the following?
I. The price level.
II. Financial innovation.
III. The exchange rate.
A.
B.
C.
D.
I only
I and II
I and III
I, II, and III
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
Between 2006 and 2007, personal income in
the U.S. increased from $11 billion to $11.6
billion. As a result, the real demand for money
________ and the demand for money curve
________.
A.
B.
C.
D.
increased; shifted rightward
did not change; did not shift
increased; shifted leftward
decreased; shifted rightward
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.
The inflation rate in Venezuela has increased
between 2005 and 2008, rising from 14 percent per
year to 37 percent per year. At the same time, the
growth rate of real GDP fell from 10 percent per
year to 5 percent per year. The quantity theory of
money
A. states that the inflation rate over the period
would average 4 percent.
B. predicts that the velocity of money will decrease
over the period.
C. states that the growth rate of money must have
increased over the period.
D. predicts that nominal GDP will decrease over
the period.
Parkin
Macroeconomics, Ninth Edition
© 2010 Pearson Addison-Wesley. All rights reserved.