Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem © 2013 Pearson Money, Interest, and Inflation 28 CLICKER QUESTIONS © 2013 Pearson Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem Checkpoint 28.1 Checkpoint 28.2 Checkpoint 28.3 Question Question 11 Question Question 44 Question Question 88 Question Question 22 Question Question 55 Question Question 99 Question Question 33 Question Question 66 Question Question 10 10 Question Question 77 © 2013 Pearson CHECKPOINT 28.1 Question The demand for money is the relationship between the quantity of money demanded and _ A the nominal interest rate B the real interest rate C the inflation rate D real GDP E the price level © 2013 Pearson CHECKPOINT 28.1 Question If the nominal interest rate is above its equilibrium level, then _ A people sell bonds, and the interest rate falls B people buy bonds, and the interest rate falls C the demand for money increases, and the interest rate rises D the supply of money decreases, and the interest rate rises E the demand for money decreases, and the interest rate falls © 2013 Pearson CHECKPOINT 28.1 Question When the Fed increases the quantity of money, A B C D E the nominal interest rate falls the nominal interest rate rises the demand for money increases people sell bonds and the nominal interest rate rises the demand for money decreases © 2013 Pearson CHECKPOINT 28.2 Question In the long run, the price level adjusts A to make the real interest rate equal to the nominal interest rate B to make the inflation rate equal to zero C to achieve money market equilibrium D to make the inflation rate equal to the growth rate of real GDP E to keep the inflation rate moderate © 2013 Pearson CHECKPOINT 28.2 Question The quantity theory of money is a proposition about _ in the long run A how the Fed changes the quantity of money B the relationship between the nominal and real interest rates C the relationship between a change in the quantity of money and the price level D the relationship between bonds and currency demanded E the nominal interest rate and the quantity of money demanded © 2013 Pearson CHECKPOINT 28.2 Question In the long run, if the quantity of money grows at percent a year, velocity does not grow, and real GDP grows at percent a year, then the inflation rate equals A percent a year B percent a year C percent a year ∆ −1 percent a year E 12 percent a year © 2013 Pearson CHECKPOINT 28.2 Question Suppose that GDP is $5,000 million and the quantity of money is $500 million Then the velocity of circulation equals _ A 50 B 500 C 20 D 10 E 2,500 © 2013 Pearson CHECKPOINT 28.3 Question Suppose that a country has a real interest rate of percent a year and an inflation rate of percent a year If the income tax rate is 20 percent, then the after-tax real interest rate is _ A 2.6 percent a year B 4.0 percent a year C 5.6 percent a year D 7.0 percent a year E 1.4 percent a year © 2013 Pearson CHECKPOINT 28.3 Question The cost of inflation when inflation becomes more rapid and when inflation becomes more unpredictable A increases; increases B increases; decreases C decreases; increases D increases; does not change E does not change; increases © 2013 Pearson CHECKPOINT 28.3 Question 10 Economists have estimated that if the inflation rate is lowered from percent a year to percent a year, the growth rate of real GDP will rise by percentage points a year A 0.06 to 0.09 B to C 2.3 D 3.2 E © 2013 Pearson ... quantity of money is $500 million Then the velocity of circulation equals _ A 50 B 500 C 20 D 10 E 2,500 © 2013 Pearson CHECKPOINT 28.3 Question Suppose that a country has a real interest rate of. .. inflation rate equal to the growth rate of real GDP E to keep the inflation rate moderate © 2013 Pearson CHECKPOINT 28.2 Question The quantity theory of money is a proposition about _ in the... how the Fed changes the quantity of money B the relationship between the nominal and real interest rates C the relationship between a change in the quantity of money and the price level D the