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1. What does the classical theory of inflation try to explain? A. changes in relative prices in the economy determined by factors other than inflation B. the effect of inflation on economic growth C. the short-run determinants of the price level and the inflation rate D. the long-run determinants of the price level and the inflation rate 2. When the money market is depicted in a graph with the value of money on the vertical axis, what does an increase in the price level cause? A. a shift to the right of the money demand curve B. a shift to the left of the money demand curve C. a movement to the left along the money demand curve D. a movement to the right along the money demand curve 3. When the money market is drawn with the value of money on the vertical axis, in which of the following situations does the price level increase? A. if either money demand or money supply shifts right B. if either money demand or money supply shifts left C. if money demand shifts right or money supply shifts left D. if money demand shifts left or money supply shifts right 4. Which of the following best describes the impact of open-market purchases by the Bank of Canada? A. The money supply and the value of money increase. B. The money supply increases, which makes the value of money decrease C. The money supply and the value of money decrease. D. The money supply decreases, which makes the value of money increase 5. In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased the money supply. How might the central banks have done this? A. by selling bonds on the open market, which would have raised the value of money B. by purchasing bonds on the open market, which would have raised the value of money C. by selling bonds on the open market, which would have lowered the value of money D. by purchasing bonds on the open market, which would have lowered the value of money

1. What does the classical theory of inflation try to explain?
A. changes in relative prices in the economy determined by factors other than inflation
B. the effect of inflation on economic growth
C. the short-run determinants of the price level and the inflation rate
D. the long-run determinants of the price level and the inflation rate
2. When the money market is depicted in a graph with the value of money on the vertical axis, what does an increase in the price level cause?
A. a shift to the right of the money demand curve
B. a shift to the left of the money demand curve
C. a movement to the left along the money demand curve
D. a movement to the right along the money demand curve
3. When the money market is drawn with the value of money on the vertical axis, in which of the following situations does the price level increase?
A. if either money demand or money supply shifts right
B. if either money demand or money supply shifts left
C. if money demand shifts right or money supply shifts left
D. if money demand shifts left or money supply shifts right
4. Which of the following best describes the impact of open-market purchases by the Bank of Canada?
A. The money supply and the value of money increase.
B. The money supply increases, which makes the value of money decrease
C. The money supply and the value of money decrease.
D. The money supply decreases, which makes the value of money increase
5. In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased the money supply. How might the central banks have done this?
A. by selling bonds on the open market, which would have raised the value of money
B. by purchasing bonds on the open market, which would have raised the value of money
C. by selling bonds on the open market, which would have lowered the value of money
D. by purchasing bonds on the open market, which would have lowered the value of money

1what does the classical theory of inflation try to explain o achanges in relative prices in the economy determined by factors other than inflation obthe effect of inflation on economic grow 54266

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