Monetary Economics
Exam Bank
Course Introduction
Monetary Economics explores the role of money and monetary institutions in shaping economic activity, focusing on the behavior of financial markets, central banks, and policy tools. The course examines how money influences inflation, interest rates, output, and employment within modern economies, integrating both theoretical frameworks and empirical analysis. Emphasis is placed on the design and effectiveness of monetary policy, the transmission mechanisms of monetary actions, and contemporary issues such as central bank independence, digital currencies, and global financial stability.
Recommended Textbook
Macroeconomics 5th Edition by Stephen D. Williamson
Available Study Resources on Quizplus
18 Chapters
966 Verified Questions
966 Flashcards
Source URL: https://quizplus.com/study-set/357
2
Chapter 1: Introduction
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/5954
Sample Questions
Q1) Which is a question of interest in this book?
A) What causes illegal immigration?
B) What mechanism could force people to pollute less?
C) What causes economic fluctuations?
D) What is the effect of penalties on crime?
Answer: C
Q2) The Beveridge curve shifted outward during what period?
A) during the Great Depression.
B) during the Great Moderation.
C) after January 2008.
D) between January 2000 and December 2007.
Answer: C
Q3) The relationship between the growth rate of an economic variable,gt,and its level,yt,can be approximated by
A) gt = yt - yt - 1.
B) gt = logt - log yt - 1.
C) yt = log gt - log gt - 1.
D) log gt = yt - yt - 1.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Measurement
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/5955
Sample Questions
Q1) An example of a flow would be the
A) rate at which water goes down the drain.
B) amount of water in a bathtub.
C) percentage of pollutants in tap water.
D) pressure of water in a pipe.
Answer: A
Q2) What is the real GDP in year 1 using base year 1?
A) $418.
B) $300.
C) $360.
D) $338.
Answer: B
Q3) The components of investment expenditures include all of the following except A) financial investment.
B) residential investment.
C) non-residential investment.
D) inventory investment.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Business Cycle Measurement
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/5956
Sample Questions
Q1) Which of the following is not a correct characterization of the U.S. business cycle?
A) Money is countercyclical.
B) Employment is procyclical.
C) Labor productivity is procyclical.
D) Prices are countercyclical.
Answer: A
Q2) Real consumption tends to be
A) procyclical and less variable than real GDP.
B) procyclical and more variable than real GDP.
C) countercyclical and less variable than real GDP.
D) countercyclical and more variable than real GDP.
Answer: A
Q3) If x is useful for predicting future GDP then
A) x is coincident.
B) x is a lagging variable.
C) x is countercyclical.
D) x is a leading variable.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
5
Chapter 4: Consumer and Firm Behavior: The Work-Leisure
Decision and Profit Maximization
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/5957
Sample Questions
Q1) When the wage increases,the income effect on the household's choices leads to
A) a decrease in consumption and leisure.
B) a decrease in consumption and an increase in leisure.
C) an increase in consumption and a decrease in leisure.
D) an increase in consumption and leisure.
Q2) A pure positive income shock leads to
A) an increase in leisure and consumption.
B) an increase in leisure and work.
C) an increase in work and consumption.
D) an increase in leisure and taxes.
Q3) An increase in total factor productivity shifts the production function
A) upward and increases the marginal product of labor.
B) upward and decreases the marginal product of labor.
C) downward and increases the marginal product of labor.
D) downward and decreases the marginal product of labor.
Q4) If the firm hires more labor,everything else held constant,then
A) the marginal product of labor falls.
B) output decreases.
C) there is an increase in the marginal product of labor.
D) total factor productivity falls.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: A Closed-Economy One-Period Macroeconomic
Model
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/5958
Sample Questions
Q1) Changes in total factor productivity are plausible causes of business cycles because productivity-induced business cycles correctly predict
A) real wages and total hours must be procyclical.
B) real wages and consumption must be procyclical.
C) total hours worked and consumption must be procyclical.
D) consumption and government spending must be procyclical.
Q2) A closed economy is characterized by
A) the absence of trade with other economies.
B) the absence of use of money for transactions.
C) no growth in population.
D) a Cobb-Douglas production function.
Q3) Suppose total factor productivity increases. Which of the following is incorrect?
A) Households are better off.
B) Consumption goes up.
C) The real wage goes down.
D) Output goes up.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Search and Unemployment
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/5959
Sample Questions
Q1) In the Keynesian DMP model,if the wage is high then
A) the vacancy rate is low.
B) the unemployment rate is low.
C) labor market tightness is high.
D) the labor force must be low.
Q2) A market failure associated with Keynesian economics is
A) pollution externalities.
B) economic agents cannot agree on prices and wages that are socially efficient.
C) insurance is imperfect.
D) banking panics.
Q3) In the DMP model
A) the market wage is equal to the marginal product of labor.
B) the market wage is equal to the marginal rate of substitution of leisure for consumption.
C) the wage is equal to the marginal rate of transformation.
D) the wage is determined by bargaining between the firm and the worker.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Economic Growth: Malthus and Solow
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/5960
Sample Questions
Q1) The Golden Rule of capital accumulation maximizes the steady-state level of A) output per worker.
B) capital per worker.
C) consumption per worker.
D) investment per worker.
Q2) The Solow residual attempts to measure the amount of output not explained by A) technological progress.
B) the direct contribution of labor and capital.
C) economic projections.
D) the amount of a nation's human capital.
Q3) Which of the following,if implemented in the Solow growth model,would not lead to a steady state?
A) A higher savings rate.
B) A higher depreciation rate.
C) A savings rate that increases as income increases.
D) A population growth rate that increases as income increases.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Income Disparity Among Countries and Endogenous Growth
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/5961
Sample Questions
Q1) In the Solow growth model,countries with identical total factor productivities,identical labor force growth rates,and identical savings rates
A) always have identical levels of capital per worker and output per worker.
B) in equilibrium, have identical levels of capital per worker and output per worker.
C) in equilibrium, have identical levels of capital per worker but not necessarily identical levels of output per worker.
D) in equilibrium, have identical levels of output per worker but not necessarily identical levels of capital per worker.
Q2) Barriers to Riches,by S. Parente and E. Prescott,emphasizes the importance of A) barriers to technological adoption.
B) barriers to the development of natural resources.
C) public education.
D) endogenous growth.
Q3) What characteristic do human and physical capital share?
A) Both are controlled by the government.
B) Current costs are incurred for future benefits.
C) Their growth depends crucially on the growth of total factor productivity.
D) The use of both exhibits rivalry.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: A Two-Period Model: The Consumption-Savings
Decision and Credit Markets
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/5962
Sample Questions
Q1) The desire to smooth consumption is reflected in
A) the consumer's budget constraint.
B) the curvature in a consumer's indifference curves.
C) choice between present and future.
D) the production possibilities frontier.
Q2) The endowment point is the consumption bundle in which
A) first-period consumption is equal to zero.
B) second-period consumption is equal to zero.
C) the consumer finds the most utility.
D) consumption is equal to disposable income in each period.
Q3) With higher future taxes
A) current consumption declines.
B) current consumption stays the same.
C) current consumption increases.
D) current consumption depends on other factors.
Q4) The endowment point is the consumption bundle in which
A) households maximize utility.
B) households are indifferent to interest rate changes.
C) permanent income is maximized.
D) savings are zero.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Credit Market Imperfections: Credit Frictions,
Available Study Resources on Quizplus for this Chatper
28 Verified Questions
28 Flashcards
Source URL: https://quizplus.com/quiz/5963
Sample Questions
Q1) In the United States
A) Social security is bankrupt.
B) Social security is implemented through individual savings accounts.
C) Social security is fully-funded.
D) Social security is pay-as-you-go.
Q2) In the two-period model with asymmetric information,the presence of bad borrowers who always default
A) makes good borrowers better off.
B) matters only for the loan interest rate faced by bad borrowers.
C) affects the equilibrium profits of banks.
D) affects good borrowers adversely.
Q3) Which of the following is not a reason for studying credit market frictions?
A) explaining features of financial crises.
B) explaining key elements of financial market behavior.
C) understanding why Ricardian equivalence may not work.
D) explaining why collateral does not matter.
To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 11: A Real Intertemporal Model with Investment
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/5964
Sample Questions
Q1) In response to a temporary increase in government spending,the representative consumer consumes
A) more and takes more leisure.
B) more and takes less leisure.
C) less and takes more leisure.
D) less and takes less leisure.
Q2) How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption,procyclical investment,procyclical employment,and procyclical real wages?
A) one
B) two
C) three
D) four
Q3) Labor demand depends on the interest rate because
A) household savings depend on the interest rate.
B) firms discount future profits.
C) of Ricardian equivalence.
D) Labor demand actually does not depend on the interest rate.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Money, Banking, Prices, and Monetary Policy
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/5965
Sample Questions
Q1) The opportunity cost of holding money is
A) zero.
B) the inflation rate.
C) the real interest rate.
D) the nominal interest rate.
Q2) M1 includes all but which of the following?
A) savings deposits.
B) currency in the hands of the public.
C) transactions accounts.
D) travelers checks.
Q3) We want money mostly because
A) it makes us happy.
B) we can buy goods with it.
C) we lengthen the life of our mattress.
D) we trust it.
Q4) The current demand for money increases when
A) current real income increases.
B) future real income decreases.
C) the nominal rate of interest increases.
D) none of the above.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Business Cycle Models with Flexible Prices and Wages
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/5966
Sample Questions
Q1) A Keynesian model that is consistent with fully flexible wages and prices is based upon the notion of
A) cooperation failures.
B) coordination failures.
C) collaboration failures.
D) decreasing returns to scale.
Q2) There are several competing models of the business cycle because
A) none currently captures all facets of the business cycle.
B) they are all rooted in different philosophical traditions.
C) different shocks need different models.
D) they depend on the type of policy that is adopted.
Q3) Extraneous events that are completely unrelated to economic fundamentals are called
A) moonbeams.
B) black holes.
C) sunspots.
D) time warps.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: New Keynesian Economics: Sticky Prices
Available Study Resources on Quizplus for this Chatper
32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/5967
Sample Questions
Q1) Suppose that there is an increase in the demand for money. What is the appropriate monetary policy response in the New Keynesian sticky price model?
A) an increase in the interest rate target
B) no change in the interest rate target
C) a decrease in the interest rate target
D) an increase in government spending
Q2) If prices in the New Keynesian model were perfectly flexible,then
A) there would be a role for monetary policy.
B) the output gap would be positive.
C) the equilibrium real interest rate would be the natural rate of interest.
D) the output gap would be negative.
Q3) Stabilization policy is to be applied if all of the following applies except
A) authorities have good information about the state of the economy.
B) policies can be applied quickly.
C) markets are out of equilibrium.
D) there is no output gap.
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: International Trade in Goods and Assets
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/5968
Sample Questions
Q1) In a two-period model with production,a decrease in the world real interest rate
A) increases the current account surplus and increases real output.
B) reduces the current account surplus and increases real output.
C) increases the current account surplus and reduces real output.
D) reduces the current account surplus and reduces real output.
Q2) In a two-period model,as long as wealth effects are small,an increase in the world real interest rate
A) increases consumption and increases the current account surplus.
B) increases consumption and decreases the current account surplus.
C) decreases consumption and increases the current account surplus.
D) decreases consumption and decreases the current account surplus.
Q3) In a two-period model with production,a permanent increase in domestic government spending
A) increases domestic output and increases the current account surplus.
B) increases domestic output and decreases the current account surplus.
C) decreases domestic output and increases the current account surplus.
D) decreases domestic output and decreases the current account surplus.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Money in the Open Economy
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/5969
Sample Questions
Q1) In the New Keynesian open economy model with a flexible exchange rate,an increase in anticipate future total factor productivity
A) has no effects.
B) increases aggregate output.
C) reduces aggregate consumption.
D) causes an exchange rate appreciation.
Q2) Adoption of a currency board
A) is one method for achieving a soft peg policy.
B) places responsibility for exchange rate management in the hands of an agency that is independent of political influences.
C) mandates the use of currency in all domestic transactions.
D) requires that a centralized institution holds interest-bearing assets denominated in the currency against which the nominal exchange rate is being fixed.
Q3) A hard peg may be achieved by all of the following except
A) following the rules of the Bretton Woods Agreement.
B) dollarization.
C) establishing a currency board.
D) mutual agreements establishing a common currency.
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Money, Inflation, and Banking
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/5970
Sample Questions
Q1) There is a double coincidence of wants when
A) person 1 has what person 2 wants, who in turn wants what person 3 has.
B) person 1 has what person 2 wants, and person 2 has money.
C) person 1 has what person 2 wants, and person 2 has what person 1 wants.
D) person 1 has money, and person 2 has what person 1 wants.
Q2) In U.S. history,use of a commodity-backed paper currency is associated with the A) Free Banking Era.
B) Confederacy during the Civil War.
C) gold standard.
D) Bretton Woods Agreement.
Q3) For assessing whether or not and how much of an asset to hold,the important consideration is the asset's amount of
A) diversifiable risk.
B) nondiversifiable risk.
C) relative risk.
D) absolute risk.
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 18: Inflation, the Phillips Curve, and Central Bank Commitment
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/5971
Sample Questions
Q1) Application of the time inconsistency problem to monetary policy suggests that,without some mechanism to ensure commitment,the
A) rate of inflation will be higher than it would be with commitment.
B) level of real output will be lower than it would be with commitment.
C) rate of inflation will be higher and the level of real output will be lower than they would be with commitment.
D) rate of inflation and the level of real output will be higher than they would be with commitment.
Q2) In the Friedman-Lucas money surprise model
A) If actual inflation is higher than anticipated inflation, then output must be above its trend value.
B) If actual inflation is higher than anticipated inflation, then output must be below its trend value.
C) money is neutral.
D) monetary policy does not work.
To view all questions and flashcards with answers, click on the resource link above. Page 20