What is a stable monetary policy essential for?

• Control of inflation, efficient allocation of investment, and achievement of economic stability

• Increasing government spending, reducing taxes, and promoting exports

• Enhancing technological innovation, improving education, and reducing unemployment

• Expanding international trade, increasing foreign investment, and promoting tourism

How does money reduce transaction costs in an economy?

• By providing a common denominator for converting the value of goods and services

• By increasing the supply of goods and services

• By reducing the need for government intervention

• By promoting international trade

What is the relationship between the productive contribution of money and its value?

• Directly related to the stability of its value

• Inversely related to the stability of its value

• Unrelated to the stability of its value

• Only related to the amount of money in circulation

What happens when the value of money is unstable?

• Many potentially beneficial exchanges are not made

• The economy experiences rapid growth

• Inflation rates decrease significantly

• Government revenue increases

What determines the value of money?

• Government policies

• Supply and demand

• International trade

• Technological advancements

What happens when the supply of money expands rapidly compared to the supply of goods and services?

• Deflation occurs

• Inflation occurs

• Economic stability increases

• Interest rates decrease

What is the money supply?

• The total amount of goods and services in an economy

• The total of the nation’s currency, checking deposits, and traveler’s checks

• The total amount of foreign currency reserves

• The total value of exports and imports

What was the annual growth rate of the money supply in countries like Nigeria and Venezuela during 1990–2014?

• 5 to 10 percent

• 10 to 20 percent

• 20 to 50 percent

• 50 to 70 percent

What is the relationship between rapid monetary expansion and inflation?

• No relationship

• Inverse relationship

• Close relationship

• Unpredictable relationship

What can extremely high rates of monetary growth lead to?

• Deflation

• Hyperinflation

• Stable prices

• Economic growth