
Question: Disinflation occurs when the overall price level:
Choices:
rises at a decreasing rate.
falls at an increasing rate.
falls
rises at an exponential rate.
Question: When the government of Zimbabwe ran out of money, President Robert Mugabe:
Choices:
collapsed.
printed more money.
raised taxes.
slashed spending.
Question: If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be:
Choices:
8.33 percent.
9.23 percent.
7.69 percent.
10 percent.
Question: If a lender expects an inflation rate of 5 percent and asks for a nominal interest rate of 10 percent, then the lender expects to earn a real interest rate of:
Choices:
Question: The average rate of inflation in the United States over the past 10 years has been around 2.6 percent. If this trend continues, how long will it take for prices in the United States to double?
Choices:
26.9 years
10.5 years
38.5 years
18.4 years
Question: 1. If a lender expects an inflation rate of 5 percent and asks for a nominal interest rate of 10 percent, then the lender expects to earn a real interest rate of:
Choices:
15 percent.
10 percent.
5 percent.
2 percent.
Question: When the expected rate of inflation is higher than the actual rate of inflation, wealth is:
Choices:
not redistributed at all.
redistributed from borrowers to lenders.
redistributed at random.
redistributed from lenders to borrowers.
Question: Suppose the nominal interest rate is 4 percent and the inflation rate is 5 percent. The real interest rate is:
Choices:
0 percent.
9 percent.
–1 percent.
1 percent.
Question: Deflation is a decrease in the:
Choices:
exchange rate.
average level of prices.
velocity of money.
inflation rate.
Question: In the long run, the quantity theory of money says that the growth rate of the money supply will be approximately equal to the:
Choices:
growth rate of real GDP.
velocity of money.
price level.
inflation rate.
Question: According to the quantity theory, what causes inflation in the long run?
Choices:
aggregate demand shocks
money supply
unemployment
unexpected inflation