Question Details

What level of seigniorage is the government currently enjoying 



1. "The chairman of the Federal Reserve Board stated that 'I remain concerned that economic growth will run into constraints if job growth continues. If some slowdown doesn't bring labor demand into line with its sustainable supply, _____ is a real danger and ______ economic policy may be necessary.'" The blanks are best filled with 
a) inflation; tighter b) inflation; easier 
c) unemployment; tighter d) unemployment; easier 
2. "Rising productivity does not in itself spell the end of inflation. With enough _______ it would still be possible to whip prices into a froth." The blank is best filled with 
a) income growth b) unemployment c) money growth d) taxes 
3. Suppose real growth is 2%, velocity is constant, the money supply is $200 billion, and the money multiplier is 4. If the monetary authorities want to maintain an inflation of 5%, how many billions of dollars of bonds should the central bank buy this year? 
a) 2 or less b) more than 2 but not more than 3 
c) more than 3 but not more than 4 d) more than 4 
4. Suppose the money multiplier is 5, long-run real growth is 2%, the current money supply is $200 billion and inflation is 8%. What level of seigniorage is the government currently enjoying? 
a) $4b or less b) more than $4b but not more than $10b 
c) more than $10b but not more than $16b d) more than $16b



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