20 true false questions 1. While it seems odd, Rothbard contends that we buy money with goods and services. 2. Except during major wars, from the mid-1700s until the mid-1900s in the U.S. prices tended to fall. 3. Even if we get paid more frequently, as long as our income is unchanged we will still demand the same amount of money. 4. If we have deflationary expectations this will decrease our demand for money. 5. Mises' has 4 phases of inflation that results in hyperinflation. 6. To end its hyperinflation, Germany issued a new currency, the Rentenmark, which exchanged with marks at 1:1 billion. 7. According to Friedman, temporary changes in our incomes will not affect our demand for money. 8. According to Friedman, the most important factor in determining our demand for money is the interest rate. 9. Friedman's views on the importance of money in our economy is referred to as the modern quantity theory of money. 10. Keynes identified the demand for money as coming from the demand for transactions purposes, precautionary purposes and speculative purposes. 11. According to Keynes, the velocity of income is positively related to the interest rate. 12. The aggregate supply (AS) - aggregate demand (AD) model can be used to analyze short run economic events, but not long run changes. 13. The aggregate demand can be derived from the quantity theory of money. 14. The aggregate demand slopes down to the right due to factors such as that a lower price level will also lower real money balances. 15. The equation of exchange shows the relationship between the supply and demand for money. 16. Any effect that raises business costs - for example, increased unionization - will shift the short run AS curve to the left. 17. If we expect future inflation, the short run AS will increase. 18. Those who are skeptical of government interventionist policies tend to believe that the long run is not really that far away. 19. While a structural model does not assume that correlation is causation, a reduced-form model does make this assumption. 20. Policymakers may end up causing inflation due to the lag effects monetary policy has on the economy