Podcast
Questions and Answers
What happens to the price level (P) when the quantity of money (M) is doubled?
What happens to the price level (P) when the quantity of money (M) is doubled?
- P decreases by 25%
- P is doubled (correct)
- P is halved
- P remains constant
How does an increase in the desire to hold money (K) affect the price level according to the text?
How does an increase in the desire to hold money (K) affect the price level according to the text?
- Price level fluctuates
- Price level decreases (correct)
- Price level increases
- Price level remains constant
In the context of the text, what does a higher value of K signify for the price-level and value of money?
In the context of the text, what does a higher value of K signify for the price-level and value of money?
- Higher value of K has no impact on price-level or value of money
- Higher value of K leads to higher price-level and value of money
- Higher value of K leads to lower price-level and lower value of money (correct)
- Higher value of K leads to lower price-level and higher value of money
Which relationship best describes the connection between the quantity of money (M) and the price level (P) according to the text?
Which relationship best describes the connection between the quantity of money (M) and the price level (P) according to the text?
What is the impact on price-level when demand for money increases according to the text?
What is the impact on price-level when demand for money increases according to the text?
How does a reduction in present expenditure due to an increase in the desire to hold money affect the price level?
How does a reduction in present expenditure due to an increase in the desire to hold money affect the price level?
What is one of the main criticisms of the cash balance approach mentioned in the text?
What is one of the main criticisms of the cash balance approach mentioned in the text?
What is a key difference between central banks and commercial banks?
What is a key difference between central banks and commercial banks?
What is a responsibility typically associated with central banks, as mentioned in the text?
What is a responsibility typically associated with central banks, as mentioned in the text?
Why is the assumption of 'ceteris paribus' considered unrealistic in relation to the cash balance approach?
Why is the assumption of 'ceteris paribus' considered unrealistic in relation to the cash balance approach?
What aspect does the cash balance approach neglect, according to the text?
What aspect does the cash balance approach neglect, according to the text?
What does a central bank typically NOT do with regards to deposits from the public?
What does a central bank typically NOT do with regards to deposits from the public?
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