Over a year, the money supply in a nation grew by 6 percent, while velocity fell by 1 percent and real GDP rose by 2 percent. This results in an inflation over the year of ________ percent
A) 9
B) 7
C) 5
D) 3
D
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If the U.S. government can run chronic budget deficits, why can't state governments do the same?
A) Conservatives have more power in state legislatures than in the U.S. Congress. B) Voters do not believe in budget deficits and they control state governments. C) Most states have no income tax. D) State constitutions require balanced budgets. E) States must rely on taxation for the funds to repay creditors.
When the U.S. exchange rate falls, U.S. goods become ________ to foreign residents and U.S. exports ________
A) less expensive; increase B) less expensive; decrease C) more expensive; decrease D) more expensive; increase
What will happen if a country uses money creation to finance a large and expanding national debt?
a. Real output and employment will grow rapidly. b. Nominal interest rates will fall. c. The foreign exchange value of the currency will increase. d. The rate of inflation will rise.
Monetary policy in the United States is the responsibility of the:
a. U.S. Treasury b. Internal Revenue Service c. Federal Reserve d. Office of Management and Budget