Question

ECO - 252 Macroeconomics

9. True/False statements. Simply state if the statement is true or false. No explanation required.

a. U.S. dollars are an example of commodity money.

b. In the long run, money neutrality implies that an increase in the money supply will increase real variables.

c. Ceteris Paribus, if banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall.

d. Open market operations include changing reserve requirements, changing the discount rate, open market sales, and open market purchases.

e. If the velocity of money and the money supply are constant, and real output doubles, the quantity equation implies that the price level will also double.

f. If the inflation rate is 3% and the real interest rate is 4%, then the nominal interest rate is 1%.

g. If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors.

h. Shoeleather costs refer to the cost of changing price tags and price listings.

Answer 1

a. U.S. dollars are an example of commodity money. Ans --> False.  

b. In the long run, money neutrality implies that an increase in the money supply will increase real variables. Ans--> False.

c. Ceteris Paribus, if banks decide to hold a smaller part of their deposits as excess reserves, the money supply will fall. Ans-->False.   

d. Open market operations include changing reserve requirements, changing the discount rate, open market sales, and open market purchases. Ans-->True.