Practice 4 Money and Inflation and Open Economy

Suppose you bought game on Steam^TM last year for Rp500,000 and you buy the same game again this year for the price of Rp700,000. What does this phenomenon called?

• a. Inflation

• b. Increase in price of goods

• c. Investment

• d. Long-term depreciation

• e. All the above

Central Bank control money supply through these policies, except

• a. Reserve Requirement

• b. BI 7 Days Reverse Repo Rate

• c. Interest on Reserve

• d. Qualitative Approach

• e. Controlling nominal exchange rate

What is the formula for money multiplier?

• a. 1:rr x money supply

• b. 1/rr

• c. 1/rr x initial deposits

• d. Deposits + reserves

• e. Loan + reserve

Why did we shift our means of payment from gold to fiat money?

• a. Gold has no value

• b. Gold has less value than fiat money

• c. Effectiveness and Efficiency

• d. Fiat money has intrinsic value

• e. Gold has no intrinsic value

These are the methods to calculate inflation:

• a. All of them

• b. GDP deflator

• c. CPI

• d. PPI

• e. B and C correct

Does expected value of Rp to USD next year has effect on money demand in FX market?

• a. Of course

• b. I really don’t know

• c. Perhaps

• d. What?

• e. No

What is the Layman’s View on inflation

• a. No inflation means that there will be no raise in wage

• b. No inflation means that there will be raise in real wage

• c. Inflation will decrease productivity

• d. Inflation will have no impact on productivity

• e. Zero-inflation is the best course of policy to pursue by central bank

“The increase use of credit card will affect money supply in long term”, does this statement true?

• a. No, but it will affect in short term

• b. Yes, but it will not affect in short term

• c. Yes

• d. No

• e. I don’t even have an opinion

Shelby Co. is a company mainly focus on export and import business. If suddenly country in which Shelby Co. operate had decided to become closed economy, could Shelby Co. continue to export and import?

• a. Yes

• b. No

• c. I don’t know

• d. Perhaps

• e. What?

What is the primary way of central bank to control money supply?

• a. Reserve Requirement

• b. BI 7 Days Reverse Repo Rate

• c. Interest on Reserve

• d. Qualitative Approach

• e. Open market operations