Which Of The Following Statements Are True About The Velocity Of Money?

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Chapter 7

Multiple Choice Questions

Multiple Choice Questions

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This activity contains 12 questions.

	Which of the following statements best defines money? Wealth is money. Income is money. The set of assets that can be used to make payments is money. Time is money.

	Which of the following is not included in M1? Currency Other checkable deposits Demand deposits Money market accounts

	The shortest reporting period for publication of data on the size of the money supply and on money supply growth is weekly. daily. semi-monthly. monthly.

	An open market purchase by the Bank of Canada will increase the supply of corporate bonds on the open market. reduce the price level. increase the nominal interest rate. increase the nominal money supply.

	The nominal demand for money is proportional to the nominal interest rate. real income. the nominal interest rate on money. the price level.

	Lower interest rates increase the real quantity of money demanded by decreasing government interest payments, which in turn increase taxes, lowering disposable income. by making alternative, nonmonetary assets look relatively less attractive to wealth holders. by changing the distribution of wealth toward the poor, who have a lower demand for money. by causing a decrease in the issuance of corporate debt.

	The income elasticity of money demand is the percent increase in the quantity of money demanded per dollar increase in nominal income. increase in the quantity of money demanded per dollar increase in nominal income. percent change in the quantity of money demanded divided by the percent change in real income. decrease in the quantity of money demanded per dollar increase in nominal income.

	If nominal GDP is $1000 billion, real GDP is $850 billion, and the nominal money stock is $500 billion, then velocity is 5 10 2 2.5

	Suppose velocity is 3, real output is 6000, and the price level is 20. What is the level of nominal money stock in this economy? 2000 40 000 120 000 100

	If real money demand remains constant, then a 10% increase in the nominal money supply will cause real income to rise by 10%. the real interest rate to rise by 10%. the price level to rise by 10%. saving to rise by 10%.

	All else constant, an increase in expected inflation causes demand for money to fall because of a higher return on alternative assets. rise because of a lower return on alternative assets. fall because of a lower return on alternative assets. rise because of a higher return on alternative assets.

	Which of the following is true about the velocity of money? Velocity is measured by the ratio of nominal GDP to the nominal money stock. Velocity measures how often the money stock turns over each period. All of the above. Velocity decreases as nominal money stock increases.

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Which Of The Following Statements Are True About The Velocity Of Money?

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