MCQ (10 marks)

1.An increase in the price level is the same as a decrease in the value of money

A.True

B.False

2.The quantity theory of money suggests that an increase in the money supply increases real output proportionately

a.True

b.False

3.The shoeleather costs of inflation should be approximately the same for a medical doctor and for an unemployed worker

a.True

b.False

4.In the long run, the demand for money is most dependent upon

a.Level of prices

b.Interest rate

c.Availability of credit card

d.None of them

5.The quantity theory of money concludes that an increase in the money supply causes

A.a proportional increase in prices

B.a proportional increase in real output

C.a proportional decrease in velocity

D.a proportional increase in velocity.

6.An example of a real variable is

a.the wage rate in euros.

b.the price of corn

c.the nominal interest rate.

d.None of these answers are real variables.

7.The velocity of money is

a.impossible to measure

b.the rate at which money changes hands.

c.the rate at which money loses its value.

d.the rate at which inflation rises.

8.Which of the following is not a function of money?

a.medium of exchange

b.hedge against inflation

c.unit of account

d.store of value

9.An increase in the budget deficit is

a.an increase in public saving.

b.a decrease in private saving.

c.none of these answers

d.a decrease in public saving.

10.Investment is the purchase of capital equipment and structures.

a.True

b.False