Question

In the money market diagram, the supply curve of money is vertical because the quantity of money supplied increases only if the Fed increases the money supply.

true

false

An extraordinarily high rate of inflation in Germany after the end of World War I likely contributed to the rise of Nazism and World War II.

true

false

If P denotes the price of goods and services measured in terms of money, then 1/P represents the value of money and an increase in the value of money is associated with a decrease in P.

true

false

According to the principle of monetary neutrality, a decrease in the money supply will decrease real GDP and decrease real interest rates

true

false

Unexpected low inflation has a greater cost for those who save and lend than those who borrow.

true

false

Answer 1

a) True, the money supply will only increase when the Fed increases the money supply in the market.

b) True, the poor conditions of the german people and hyper inflaiton all where responsible for the rise of the nazism in Germany.

c) True,

d) False, it will not change the real value only affect the nominla value of the goods in the market.

e) False, unexpected low inflation is a bigger cost for those who borrow.