Question 1

The table below shows data for Japan.

Assuming the rate of velocity change is constant, real GDP

Accepted Answer

To calculate the real GDP growth rate, we need to calculate the percentage change in nominal GDP adjusted for inflation. Using the data given in the table, we can calculate the real GDP for 2005 and 2006 by dividing the nominal GDP by the GDP deflator (which is given as 100 in both years).

Real GDP 2005 = Nominal GDP 2005 / GDP deflator 2005 = 440.5 / 100 = 4.405 trillion yen
Real GDP 2006 = Nominal GDP 2006 / GDP deflator 2006 = 454.4 / 100 = 4.544 trillion yen

The percentage change in real GDP from 2005 to 2006 can be calculated as follows:
(Real GDP 2006 - Real GDP 2005) / Real GDP 2005 x 100%
= (4.544 - 4.405) / 4.405 x 100%
= 3.15%

Therefore, the correct answer is B, real GDP grew by 2.8 percent in 2006.

Question 2

Define money and list its functions.

Accepted Answer

The answer of Define money and list its functions....

Question 3

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and Septembe Suppose that the required reserve ratio is 3 percent.  The data show that

Accepted Answer

In 2007, Wells Fargo had $19,367 million in total reserves, which is more than the required reserves of $14,239 million calculated as 3% of total deposits of $474,642 million. This means that Wells Fargo had excess reserves and could potentially create money through lending. In 2008, total reserves decreased to $17,304 million, which is still greater than the required reserves of $14,747 million calculated as 3% of total deposits of $491,558 million. However, it is unclear whether the Federal Reserve changed the required reserve ratio or if Wells Fargo decided to reduce its excess reserves. The currency drain ratio, which is the proportion of cash and deposits held by the public, decreased slightly from 0.16 in 2007 to 0.15 in 2008. The data do not indicate that Wells Fargo needed to gain more deposits in order to make more loans.

Question 4

Between 2006 and 2007, personal income in the U.S. increased from $11 billion to $11.6 billion. As a result, the real demand for money and the demand for money curve .

Accepted Answer

An increase in personal income would lead to an increase in the demand for money, as individuals would have more money available to spend. This would cause the demand for money curve to shift rightward, indicating that at any given interest rate, individuals would be willing to hold a higher quantity of money.

Question 5

What are the three functions of money?

Accepted Answer

The answer of What are the three functions of money?...

Question 6

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200  The data show that Sun Trust

Accepted Answer

The data shows that the reserve ratio increased from 4.7 percent in September 2007 to 5.3 percent in September 2008, indicating that Sun Trust increased its reserves over the 12 months. The data also shows that excess reserves decreased from $5,966 million in September 2007 to $2,709 million in September 2008, indicating that Sun Trust had fewer excess reserves in 2008. The currency drain ratio remained relatively stable, with a slight decrease from 0.32 in September 2007 to 0.31 in September 2008, so it does not appear to be a significant factor in the changes observed. Therefore, the best choice is D) increased its reserve ratio to 5.3 percent over the 12 months.

Question 7

The table below shows data for Indonesia between 2005 and 2006.

Assume the rate of velocity change is constant. According to the quantity theory of money, Indones inflation rate

Accepted Answer

According to the quantity theory of money, the equation is MV=PQ, where M is the money supply, V is the velocity of money, P is the price level, and Q is the real output. Assuming the rate of velocity change is constant, we can solve for the inflation rate as (M2/M1) - 1 = (P2/P1) - 1. Using the data provided in the table, we can calculate the inflation rate for 2005 as (102/80)-1 = 0.275 or 27.5%, and for 2006 as (124/105)-1 = 0.180 or 18%. Therefore, option B is correct as the inflation rate was higher in 2005 than in 2006.

Question 8

Give an example of how money functions as a unit of account.

Accepted Answer

The answer of Give an example of how money functions...

Question 9

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

Accepted Answer

The answer of In August 2007, Sun Trust Bank has...

Question 10

The table below shows data for Brazil.

Assuming the rate of velocity change is constant, the money growth rate in Brazil was

Accepted Answer

The answer of The table below shows data for Brazil.

Assuming...

Question 11

What is barter? What is a double coincidence of wants? How does the existence of money affect barter?

Accepted Answer

The answer of What is barter? What is a double...

Question 12

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200 Suppose that the required reserve ratio is 3 percent.  The data show that Sun Trust make more loans in 2007 and _ _ make more loans in

Accepted Answer

The answer of The table below shows data (in millions)...

Question 13

In 2006, real GDP in Belgium grew at a 3 percent rate and inflation was 1.8 percent while the population did not change. As a result, there was the demand for money curve in Belgium.

Accepted Answer

A rightward shift of the demand for money curve would occur due to the 3 percent real GDP growth and 1.8 percent inflation, which increases the overall demand for money within the economy.

Question 14

The table below shows data for Brazil.

Assuming the rate of velocity change is constant,

Accepted Answer

The answer of The table below shows data for Brazil.

Assuming...

Question 15

In 2006, the price level in the United States. was 202. By 2007, it had increased to 207. As a result, the real demand for money and the demand for money curve over the 12 months.

Accepted Answer

The answer of In 2006, the price level in the...

Question 16

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and Septembe Suppose that the required reserve ratio is 3 percent.  The data show that Wells Fargo

Accepted Answer

The data show that Wells Fargo had $28 billion in excess reserves in September 2007 and only $2 billion in excess reserves in September 2008. This indicates that they had fewer excess reserves in 2008 (choice D). The required reserve ratio is not explicitly shown in the table, but it is stated in the question to be 3 percent, and there is no indication that it changed, so choice B is also correct. There is no evidence in the table to support choices A or C.

Question 17

In September 2007, Regions Bank held $3 million in reserves against M1 deposits and made $83 million in loans. Between September 2007 and September 2008, deposits decreased from $114 million to $95 million. If Regions Bank wants to maintain its desired reserve ratio in 2008, it will

Accepted Answer

The answer of In September 2007, Regions Bank held $3...

Question 18

The inflation rate in Venezuela has increased between 2005 and 2008, rising from 14 percent per year to 37 percent per year. At the same time, the growth rate of real GDP fell from 10 percent per year to 5 percent per year. The quantity theory of money

Accepted Answer

The quantity theory of money states that the growth rate of money is directly proportional to the inflation rate. Therefore, if the inflation rate has increased, the growth rate of money must have also increased. Option A is incorrect because the nominal GDP may still increase with inflation. Option B is also incorrect because the velocity of money is not given in the question. Option D is incorrect because the average inflation rate is not relevant to the question.

Question 19

In 2007, interest rates in Germany were 4.7 percent while the inflation rate was 1.7 percent. In 2008, interest rates increased to 5.3 percent and the inflation rate increased to 2.0. As a result, there is

Accepted Answer

With an increase in both interest rates and inflation rates, there is an upward pressure on the demand for money in Germany. This implies that individuals and firms would require more money to be able to afford the higher interest rates and the increased cost of goods due to inflation. As a result, there would be an upward movement along Germany's demand for money curve.

Question 20

In September 2008, Regions Bank held $78 million in loans, $95 million in deposits and $5 million in reserves. If Regions Bank's desired reserve ratio is 2.5 percent, then the bank

Accepted Answer

Regions Bank's desired reserve ratio is 2.5%, which means it needs to hold $2.375 million in reserves (2.5% of $95 million in deposits). Since it has $5 million in reserves, it has excess reserves of $2.625 million, allowing it to create money and make loans.

Quiz 8: Money, the Price Level, and Inflation

The table below shows data for Japan. Assuming the rate of velocity change is constant, real GDP

Define money and list its functions.

The table below shows the data (in millions) for Wells Fargo Bank in September 2007 and Septembe Suppose that the required reserve ratio is 3 percent. The data show that

Between 2006 and 2007, personal income in the U.S. increased from $11 billion to $11.6 billion. As a result, the real demand for money and the demand for money curve .

What are the three functions of money?

The table below shows data (in millions) for Sun Trust Banks in September 2007 and September 200 The data show that Sun Trust

The table below shows data for Indonesia between 2005 and 2006. Assume the rate of velocity change is constant. According to the quantity theory of money, Indones inflation rate

Give an example of how money functions as a unit of account.

In August 2007, Sun Trust Bank has $83 million in loans and $114 million in M1 deposits. If Sun Trust is holding $4 million in reserves, the bank's reserve ratio is

The table below shows data for Brazil. Assuming the rate of velocity change is constant, the money growth rate in Brazil was