EXAM 3 - ECON 111 questions with
accurate answers
If the price level increased from 130 to 150, then what was the inflation rate? - correct answer
✔✔15.4%
In the long run, money demand and money supply determine - correct answer ✔✔the value of
money but not the real interest rate.
If the money supply is MS2 and the value of money is 5, then there is an excess - correct answer
✔✔supply of money that is represented by the distance between points D and A.
If the relevant money-demand curve is the one labeled MD2, then the equilibrium value of
money is - correct answer ✔✔0.61 and the equilibrium price level is 1.6.
An associate professor of physics gets a $200 a month raise. With her new monthly salary she
can buy more goods and services than she could buy last year. - correct answer ✔✔Her real and
nominal salary have risen.
According to the classical dichotomy, which of the following increases when the money supply
increases? - correct answer ✔✔the nominal wage
If M = 5,000, P = 5.5, and Y = 9,000, what is velocity? - correct answer ✔✔10
According to the assumptions of the quantity theory of money, if the money supply increases by
7 percent, then - correct answer ✔✔nominal GDP would rise by 7 percent; real GDP would be
unchanged.
, The inflation tax refers to - correct answer ✔✔the revenue a government creates by printing
money
Katarina puts money into an account. One year later she sees that she has 6 percent more
dollars and that her money will buy 4 percent more goods. The nominal interest rate was -
correct answer ✔✔6 percent and the inflation rate was 2 percent.
You bought some shares of stock and, over the next year, the price per share increased by 5
percent, as did the price level. Before taxes, you experienced - correct answer ✔✔a nominal
gain, but no real gain, and you paid taxes on the nominal gain.
James took out a fixed-interest-rate loan when the CPI was 200. He expected the CPI to increase
to 206 but it actually increased to 204. The real interest rate he paid is - correct answer
✔✔higher than he had expected, and the real value of the loan is higher than he had expected.
Net exports of a country are the value of - correct answer ✔✔goods and services exported
minus the value of goods and services imported.
A country's trade balance - correct answer ✔✔is greater than zero only if exports are greater
than imports.
Suppose that a country imports $120 million worth of goods and services and exports $160
million worth of goods and services. What is the value of net exports? - correct answer ✔✔40
million
The purchase of U.S. government bonds by Japanese is an example of - correct answer
✔✔foreign portfolio investment by Japanese.
Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries.
This increase would make foreigners - correct answer ✔✔more willing to purchase U.S. bonds,
so U.S. net capital outflow would fall
accurate answers
If the price level increased from 130 to 150, then what was the inflation rate? - correct answer
✔✔15.4%
In the long run, money demand and money supply determine - correct answer ✔✔the value of
money but not the real interest rate.
If the money supply is MS2 and the value of money is 5, then there is an excess - correct answer
✔✔supply of money that is represented by the distance between points D and A.
If the relevant money-demand curve is the one labeled MD2, then the equilibrium value of
money is - correct answer ✔✔0.61 and the equilibrium price level is 1.6.
An associate professor of physics gets a $200 a month raise. With her new monthly salary she
can buy more goods and services than she could buy last year. - correct answer ✔✔Her real and
nominal salary have risen.
According to the classical dichotomy, which of the following increases when the money supply
increases? - correct answer ✔✔the nominal wage
If M = 5,000, P = 5.5, and Y = 9,000, what is velocity? - correct answer ✔✔10
According to the assumptions of the quantity theory of money, if the money supply increases by
7 percent, then - correct answer ✔✔nominal GDP would rise by 7 percent; real GDP would be
unchanged.
, The inflation tax refers to - correct answer ✔✔the revenue a government creates by printing
money
Katarina puts money into an account. One year later she sees that she has 6 percent more
dollars and that her money will buy 4 percent more goods. The nominal interest rate was -
correct answer ✔✔6 percent and the inflation rate was 2 percent.
You bought some shares of stock and, over the next year, the price per share increased by 5
percent, as did the price level. Before taxes, you experienced - correct answer ✔✔a nominal
gain, but no real gain, and you paid taxes on the nominal gain.
James took out a fixed-interest-rate loan when the CPI was 200. He expected the CPI to increase
to 206 but it actually increased to 204. The real interest rate he paid is - correct answer
✔✔higher than he had expected, and the real value of the loan is higher than he had expected.
Net exports of a country are the value of - correct answer ✔✔goods and services exported
minus the value of goods and services imported.
A country's trade balance - correct answer ✔✔is greater than zero only if exports are greater
than imports.
Suppose that a country imports $120 million worth of goods and services and exports $160
million worth of goods and services. What is the value of net exports? - correct answer ✔✔40
million
The purchase of U.S. government bonds by Japanese is an example of - correct answer
✔✔foreign portfolio investment by Japanese.
Suppose that real interest rates in the U.S. rise relative to real interest rates in other countries.
This increase would make foreigners - correct answer ✔✔more willing to purchase U.S. bonds,
so U.S. net capital outflow would fall
