Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1
12) Which of the following is a true statement?
A) Money or the money supply is defined as Federal Reserve notes. B) The average price of goods and services in an economy is called the aggregate price level. C) The inflation rate is measured as the rate of change in the federal government budget deficit. D) The aggregate price level is measured as the rate of change in the inflation rate. Answer: B
Ques Status: Revised
13) If ten years ago the prices of the items bought last month by the average consumer would have been much
higher, then one can likely conclude that A) the aggregate price level has declined during this ten-year period. B) the average inflation rate for this ten-year period has been positive. C) the average rate of money growth for this ten-year period has been positive. D) the aggregate price level has risen during this ten-year period. Answer: A
Ques Status: Revised
14) From 1950-2005 the price level in the United States increased more than ________.
A) twofold B) threefold C) sixfold D) ninefold Answer: C
Ques Status: New
15) One likely explanation for the relatively high rates of inflation experienced in many Latin American countries
is the A) relatively slow growth in the money supply in these countries. B) relatively rapid growth in the money supply in these countries. C) decline in the prices of basic commodities in these countries. D) budget surpluses maintained in these countries. Answer: B
Ques Status: Revised
16) Complete Milton Friedman's famous statement, \
phenomenon.\A) recessionary B) discretionary C) repressionary D) monetary Answer: D
Ques Status: Previous Edition
Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1
17) Countries that experience very high rates of inflation have
A) balanced budgets. B) rapidly growing money supplies. C) falling money supplies. D) constant money supplies. Answer: B
Ques Status: Revised
18) ________ policy involves decisions about government spending and taxation.
A) Monetary B) Fiscal C) Financial D) Systemic Answer: B
Ques Status: New
19) When tax revenues are greater than government expenditures, the government has a budget ________.
A) crisis B) deficit C) surplus D) revision Answer: C
Ques Status: New
20) Budgets deficits can be a concern because they might
A) ultimately lead to higher inflation. B) lead to lower interest rates. C) lead to a slower rate of money growth. D) lead to higher bond prices. Answer: A
Ques Status: Revised
21) Budget deficits are important because deficits
A) cause bank failures. B) always cause interest rates to fall. C) can result in higher rates of monetary growth. D) always cause prices to fall. Answer: C
Ques Status: Revised
22) Between 1950 and 1980 in the U.S., interest rates trended upward. During this same time period,
A) the rate of money growth declined. B) the rate of money growth increased. C) the government budget deficit (expressed as a percentage of GNP) trended downward. D) the aggregate price level declined quite dramatically. Answer: B
Ques Status: Previous Edition
Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1
23) What happens to economic growth and unemployment during a business cycle recession? What is the
relationship between the money growth rate and a business cycle recession? Answer: During a recession, output declines and unemployment increases. Prior to every recession in the U.S.
the money growth rate has declined, however, not every decline is followed by a recession.
Ques Status: New
Economics of Money, Banking, and Financial Markets, 8e (Mishkin) Chapter 1 1.4 How We Will Study Money, Banking, and Financial Markets There are no questions for this section.
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