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c. Velocity refers to the speed at which the money supply transforms over. Velocity plays a critical role in the amount theory the money due to the fact that it is normally really stable. The stability means that inflation is led to by a readjust in the money supply.
Which that the adhering to correctly expresses the quantity theory that money?Select one:a. Money × the price level = velocity × genuine outputb. Money × velocity = price level × real output c. Velocity × real output = price level × moneyd. Price level × velocity = real output
b. The quantity theory of money claims that the price level times actual output is same to the money supply times the velocity, or the number of times the money supply turns over. Velocity is generally stable. The implication because that this reality is that boosts in the money supply cause the price level to increase unless actual GDP increases.
If the money supply increases by 10% and real GDP boosts by 3%, prices will rise bySelect one:a. More than 10%.b. 10%.c. 13%.d. Much less than 10%.
d. Although over there is a 10% increase in the money supply, over there is rise in real GDP that partially compensates because that the increase in money. As such the rise in prices would certainly be something less than 10%. You deserve to see this in the amount equation M × V = p × Y.
The commonly held belief that once the main bank create money, prices climb is calledSelect one:a. NAIRU, or the organic rate that unemployment.b. Okun"s law.c. The Friedman dilemma.d. The quantity theory the money.
d. The quantity theory of money states that inflation is always caused through too much money. As soon as the Fed causes the expansion rate of the money it is provided to increase much faster than the potential increase in real GDP, the an outcome is inflation.
The quantity theory the money have the right to explainSelect one:a. Hyperinflation, but not center inflation.b. Moderate inflation, but not hyperinflation.c. Center inflation and also hyperinflation, however not deflation.d. Moderate inflation, hyperinflation, and also deflation.
d. The amount theory the money determines every the results on prices and output early out to changes in the money supply, stop the velocity that money constant.
The velocity that money is defined asSelect one:a. The price at i m sorry the Fed increases the money supply.b. The rate at which money is being spent.c. The average variety of times per year a dollar transforms hands. D. The average variety of times every year a dissension is spent on a customer good.
c. The velocity the money identify on mean how plenty of times a dissension is spent and also re-spent in one year.
FalseThe quantity equation is created as M × V = p × Y, wherein M is the money supply, V is the velocity that money, p is the price level, and also Y is output.
Suppose the U.S. Economic climate is experiencing a recession. Enhancing the money supply will certainly provoke an expansion.Select one:True False
TrueIn a recessionary economy, joblessness is high. Hold the velocity the money continuous and enhancing the money supply will certainly cause boost in production, income, and also equilibrium GDP. This chain of events will reason a short-run expansion.
Increasing the money supply in an expanding economy will most most likely causeSelect one:a. An increase in equilibrium GDP.b. Rise in the price level. C. A decrease in the unemployment rate.d. Further financial expansion.
b. Since unemployment is currently low, raising the money supply will only increase the price level and push the economic climate into a recession.
Assume the velocity that money is held constant. According to the classical view the money,Select one:a. Changes in the money supply will influence either price or output.b. Output is resolved in the long run, so transforms in the money supply will certainly only influence the price level. C. Transforms in the money supply will only influence output.d. Alters in in the name of variables will only affect real variables.
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b. The classic view that money hold output constant in the long run and assumes the velocity of money is constant. So alters in the money supply will only influence the price level.
Connect Finance Online access for Essentials of Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie