During a particular year, nominal wages increased by 4 percent but real wages declined by 2 percent. ...

During a particular year, nominal wages increased by 4 percent but real wages declined by 2 percent. This implies that the price level increased by 6 percent.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

If the Fed targets the interest rate, then:
 a. the money supply will grow at a more controlled rate.
 b. monetary policy will reinforce fluctuations in economic activity.
  c. the price level will be more stable in the long run.
 d. money demand will be more stable.
 e. velocity will be less stable.

QUESTION 3

A failure in coordination between workers and employers is most likely to cause an expansionary gap.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

For interest rates to remain stable during economic expansions, the money supply should:
 a. decrease at a faster rate than the demand for money.
  b. grow at the same rate as money demand.
 c. grow at a faster rate than money demand.
 d. grow at a slower rate than money demand.
 e. decrease at a slower rate than the demand for money.

QUESTION 5

If the price level increases by 5 percent and the nominal wage increases by 3.5 percent, the real wage will decrease by 1.5 percent.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

If interest rates are to remain constant, the money supply should change:
 a. in the opposite direction to a change in aggregate demand.
  b. in the same direction as a change in money demand.
 c. only when investment changes.
 d. only when the demand for money decreases.
 e. only when the inflation rate changes.

QUESTION 7

If the rate of increase in the price level exceeds the rate of increase in nominal GDP, real GDP declines.
 a. True
  b. False
  Indicate whether the statement is true or false