21.According to the quantity theory of money, ultimate control over the rate of inflation in the United States is exercised by:
A)the Organization of Petroleum Exporting Countries (OPEC).
B)the U.S. Treasury.
C)the Federal Reserve.
D)private citizens.
22.According to the quantity theory of money, if money is growing at a 10 percent rate and real output is growing at a 3 percent rate, but velocity is growing at increasingly faster rates over time as a result of financial innovation, the rate of inflation must be:
A)increasing.
B)decreasing.
C)7 percent.
D)constant.
23.If the money supply increases 12 percent, velocity decreases 4 percent, and the
A)3
B)4
C)9
D)11
24.Percentage change in P is approximately equal to the percentage change in:
A)M.
B)M minus percentage change in Y.
C)M minus percentage change in Y plus percentage change in velocity.
D)M minus percentage change in Y minus percentage change in velocity.
25.Using average rates of money growth and inflation in the United States over many decades, Friedman and Schwartz found that decades of high money growth tended to have ______ rates of inflation and decades of low money growth tended to have ______ rates of inflation.
A)high; high
B)high; low
C)low; low
D)low; high
26.Using decade-long data across countries from 2000–2010, countries with high money growth tend to have _____ inflation.
A)high
B)low
C)constant
D)decreasing
27.The right of seigniorage is the right to:
A)levy taxes on the public.
B)borrow money from the public.
C)draft citizens into the armed forces.
D)print money.
28.“Inflation tax” means that:
A)as the price level rises, taxpayers are pushed into higher tax brackets.
B)as the price level rises, the real value of money held by the public decreases.
C)as taxes increase, the rate of inflation also increases.
D)in a hyperinflation, the chief source of tax revenue is often the printing of money.
29.The inflation tax is paid:
A)only by the central bank.
B)by all holders of money.
C)only by government bond holders.
D)equally by every household.
30.The percentage of government revenue raised by printing money has usually accounted for:
A)more than 10 percent of government revenue in the United States.
B)less than 3 percent of government revenue in the United States.
C)less than 3 percent of government revenue in Italy.
D)less than 3 percent of government revenue in Greece.
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