Question

QUESTION 3 Of all the following that could be used as money, which would be most likely to be characterized as fiat money? Chocolate bars Silver jewellery Gum wrappers Salt QUESTION 4 According to the classical dichotomy, which of these variables is not affected by monetary policy? The price level The nominal interest rate The real interest rate Nominal GDP QUESTION 5 According to the quantity theory of money, if the growth rate of money supply increases by 3 percentage points, what happens to real income in the long run? increases by 3% its growth rate increases by 3 percentage points remains the same decreases by 3% O O

Answer 1

a) "C"

The Gum wrapper can be made fiat money because it doesn't have any value of its own like silver, chocolate or salt.

b) "C"

the real interest rate will not be affected by monetary policy that will only affect the nominal variables.

c) "C"

The real income will remain the same its the nominal value that will change.