the economics of money, banking, and financial markets

14 "

© 2014 Pearson Canada Inc."

9. 
   

   Inflation ____.
   A) can be explained by changes in the price level and money supply
   B) cannot be explained historically
   C) is unrelated to monetary variables
   D) changes in government policy
   Answer: A
   Diff: 1 Type: MC Page Ref: 8
   Skill: Recall
   Objective List: 1.3 Describe why money is a major influence on inflation, business cycles, and
   interest rates

   
   


10. 
    

    The average price of goods and services in the economy is called ____.
    A) the aggregate price level
    B) inflation
    C) interest rates
    D) deflation
    Answer: A
    Diff: 1 Type: MC Page Ref: 8
    Skill: Recall
    Objective List: 1.3 Describe why money is a major influence on inflation, business cycles, and
    interest rates

    
    


11. 
    

    It is true that inflation is a ____.
    A) continual increase in the money supply
    B) continuous fall in prices
    C) decline in interest rates
    D) continual increase in the price level
    Answer: D
    Diff: 1 Type: MC Page Ref: 8
    Skill: Recall
    Objective List: 1.3 Describe why money is a major influence on inflation, business cycles, and
    interest rates

    
    


12. 
    

    Which of the following is a true statement?
    A) Money or the money supply is defined as Bank of Canada notes.
    B) The average price of goods and services in an economy is called the aggregate price level.
    C) The inflation rate is measured as the rate of change in the federal government budget deficit.
    D) The aggregate price level is measured as the rate of change in the inflation rate.
    Answer: B
    Diff: 2 Type: MC Page Ref: 8
    Skill: Recall
    Objective List: 1.3 Describe why money is a major influence on inflation, business cycles, and
    interest rates