If the reserve ratio is ¼ and the central bank increases the quantity of reserves in the banking system by $120, the money supply increases by a.$90. b. $150. c.$160. d. $480.

Which of the following is NOT true about the Federal Reserve?

a. It was established by the U.S. Constitution.

b. It regulates the banking system.

c. It lends to banks.

d. It conducts open-market operations .

The money supply includes all of the following EXCEPT a. metal coins. b. paper currency c. lines of credit accessible with credit cards. d. bank balances accessible with debit cards.

If nominal GDP is $400, real GDP is$200, and the money supply is $100, then a. the price level is ½, and velocity is 2. b. the price level is ½, and velocity is 4. c. the price level is 2, and velocity is 2. d. the price level is 2, and velocity is 4.

Chloe takes $100 of currency from her wallet and deposits it into her checking account. If the bank adds the entire$100 to reserves, the money supply ______, but if the bank lends out some of the $100, the money supply _____. a. increases, increases even more b. increases, increases by less c. is unchanged, increases d. decreases, decreases by less

If an economy always has inflation of $10$ percent per year, which of the following costs of inflation will it NOT suffer?

a. shoeleather costs from reduced holdings of money

b. menu costs from more frequent price adjustment

Hyperinflations occur when the government runs a large budget ______, which the central bank finances with a substantial monetary ______. a. deficit, contraction b. deficit, expansion c. surplus, contraction d. surplus, expansion

In an open economy, national saving equals domestic investment a. plus the net outflow of capital abroad. b. minus the net exports of goods and services. c. plus the government’s budget deficit. d. minus foreign portfolio investment.

In a system of fractional-reserve banking, even without any action by the central bank, the money supply declines if households choose to hold currency or if banks choose to hold ______ excess reserves. a. more, more b. more, less c. less, more d. less, less

Which of the following actions by the Fed would reduce the money supply? a. an open-market purchase of government bonds b. a reduction in banks’ reserve requirements c. an increase in the interest rate paid on reserves d. a decrease in the discount rate on Fed lending

The aggregate-demand curve slopes downward because a fall in the price level causes

a. real wealth to decrease.

b. the interest rate to decline.

c. the currency to appreciate.

d. all of the above.

Which of the following is NOT true about the Federal Reserve?

a. It was established by the U.S. Constitution.

b. It regulates the banking system.

c. It lends to banks.

d. It conducts open-market operations.

The aggregate-demand curve slopes downward because a fall in the price level causes

a. real wealth to decrease.

b. the interest rate to decline.

c. the currency to appreciate.

d. all of the above.

In the model of aggregate demand and aggregate supply, the quantity of$\underline{\phantom{\text{justtexttekst}}}$ is on the horizontal axis, and the$\underline{\phantom{\text{justtexttekst}}}$ is on the vertical axis.

a. output; interest rate

b. output; price level

c. money; interest rate

d. money; price level