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Course Title: Monetary Economics Short Quiz Instructions: Attempt all Questions Choose only one option 1. The quantity theory of money is a theory of (a) how the money supply is determined. (b) how interest rates are determined. (c) how the nominal value of aggregate income is determined. (d) all of the above. 2. Because the quantity theory of money tells us how much money is held for a given amount of aggregate income, it is also a theory of (a) interest-rate determination. (b) the demand for money. (c) exchange-rate determination. (d) none of the above 3. The average number of times that a dollar is spent in buying the total amount of final goods and services produced during a given time period is known as (a) gross national product. (b) the spending multiplier. (c) the money multiplier. (d) velocity > 4. If the money supply is 600 and nominal income is 3,000, the velocity of money is (a) 5. (b) 50. (c) 1/5. (d) undefined. 5. Demand-pull inflation may be caused by: [ a) An increase in costs [ b) A reduction in interest rates [' c) A reduction in government spending [ d) An outward shift in aggregate supply 6. Inflation: [ a) Always reduces the cost of living" b) Always reduces the standard of living [ c) Reduces the price of products [ d) Reduces the purchasing power of a pound 7. An increase in costs will: [ a) Shift aggregate demand [ b) Shift aggregate supply [ c) Reduce the natural rate of unemployment [ d) Increase the productivity of employees 8. The Phillips curve shows the relationship between inflation and what? Ca) The balance of trade [ b) The rate of growth in an economy [ c) The rate of price increases [ d) Unemployment 9. The equation of exchange is (a) M x P = VxY. (b) M + V = P+Y. (c] M + Y = V + P. (d) M/V = Y/P.