Chapter 30 Multiple Choice Questions

An increase in the price level makes the value of money

• increase, so people want to hold more of it

• increase, so people want to hold less of it

• decrease, so people want to hold more of it

• decrease, so people want to hold less of it

When the price level falls, the number of dollars needed to buy a representative basket of goods

• increases, so the value of money rises

• increases, so the value of money falls

• decreases, so the value of money rises

• decreases, so the value of money falls

The supply of money is determined by

• the price level

• the Treasury and Congressional Budget Office

• the Federal Reserve System

• the demand for money

The supply of money increases when

• the value of money increases

• the interest rate increases

• the Fed makes open-market purchases

• none of these is correct

When the money market is drawn with the value of money on the vertical axis,

• money demand slopes up and money supply is horizontal

• money demand slopes down and money supply is vertical

• money demand slopes up and money supply is horizontal

• money demand slope down and money supply is vertical

When the money market is drawn with the value of money on the vertical axis, an increase in the money supply shifts the money supply curve to the

• right, lowering the price level

• right, raising the price level

• left, raising the price level

• eft, lowering the price level

When the money market is drawn with the value of money on the vertical axis, the price level increases if

• either money demand or money supply shifts right

• either money demand or money supply shifts left

• money demand shifts right or money supply shifts left

• money demand shifts left or money supply shifts right

If the money supply is MS2 and the value of money is 2

• the value of money is less than its equilibrium level

• the price level is higher than its equilibrium level

• the quantity of money demanded is greater than the quantity of money supplied

• the quantity of money supplied is greater than the quantity of money demanded

When the money supply curve shifts from MS1 to MS2, the graph shows that

• the demand for goods and services decreases

• the economy's ability to produce goods and services increases

• the equilibrium price level increases

• the equilibrium value of money increases

Economic variables whose values are measured in monetary units are called

• dichotomous variables

• nominal variables

• classical variables

• real variables