Money Neutrality Flashcards Preview

Economic Policy Analysis > Money Neutrality > Flashcards

Flashcards in Money Neutrality Deck (11)
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1
Q

Money is Neutral

A

changes in stock of money affect nominal but not real variable

2
Q

if money is neutral, role of Central bank is…

A

diminished

3
Q

government finances nominal spending by

A
  1. Levying nominal lump-sum taxes
  2. Issuing nominal debt
  3. Raising nominal seigniorage
4
Q

key to breaking the neutrality of money

A

expectations

5
Q

debt to GDP ratio _____ with the level of deficit

A

increases

6
Q

every major depression in the US is associated with ______

A

a contraction in the money supply

7
Q

money is _____ in the long run

A

neutral

8
Q

in the short run, money supply…

A

could possibly have real economic implications

9
Q

nominal value unit of measurement

A

dollars

10
Q

real value unit of measurement

A

consumption goods

11
Q

relationship between real interest rate and nominal interest rate

A

real interest rate is the nominal interest rate less inflation