1. Real output is $12,000, the price level is 4, and the velocity of money is 2. Based on this, the money supply must be

$6,000

$8,000

$20,000

$24,000

$96,000

2. Assume that the velocity of money is constant. If there is a 2 percent increase in the money supply in the short run, it will result in a 2 percent increase in

the employment rate

the real interest rate

the nominal interest rate

the real gross domestic product

the nominal gross domestic product

3. Assume that the economy is at full employment. According to the quantity theory of money, a fully anticipated increase of the money supply will impact the price level and real output of an economy in what ways?

Price level and real GDP will both increase.

Price level will decrease, and real GDP will not change.

Price level will increase, and real GDP will not change.

Neither the price level nor real GDP will change.

Price level will increase, and real GDP will decrease.

4. An economy is operating at full employment. If the central bank gradually increases the money supply by 5 percent, what will happen in the long run according to the quantity theory of money?

Nominal output will increase by 5 percent.

The unemployment rate will decrease by 5 percent.

Overall employment will increase by 5 percent.

Real output will increase by 5 percent.

The price level will decrease by 5 percent.

5. Which of the following is a cause of hyperinflation?

The money supply increasing rapidly

Real GDP increasing rapidly

Simultaneous positive and negative shocks to aggregate supply

The nominal interest rate increasing sharply

Both aggregate demand and short-run aggregate supply increasing