1. The velocity of money is: A) real GDP divided by the real quantity of money. B) nominal GDP divided by the nominal quantity of money. C) real GDP divided by the nominal quantity of money. D) nominal GDP divided by the real quantity of money.

ENGR.ECONOMIC ANALYSIS
14th Edition
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Chapter1: Making Economics Decisions
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1. The velocity of money is:
A) real GDP divided by the real quantity of money.
B) nominal GDP divided by the nominal quantity of money.
C) real GDP divided by the nominal quantity of money.
D) nominal GDP divided by the real quantity of money.
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2. According to the loanable funds model, contractionary monetary policy:
A) shifts the supply curve for loanable funds to the left.
B) shifts the demand curve for loanable funds to the left.
C) shifts the demand curve for loanable funds to the right.
D) shifts the supply curve for loanable funds to the right.
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3
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3. Monetary neutrality implies that in the long run:
A) aggregate supply is independent from monetary policy.
B) changing the money supply does not have any effect on the aggregate price level.
C) aggregate demand is independent from monetary policy.
D) monetary policy does not affect the level of economic activity.
Ć
3
C
4. Assume the following hypothetical example. The money supply doubles, followed by a
doubling of the wage rate and the price level. Under these circumstances, we can safely
conclude which of the following?
A) Real aggregate output will fall in half.
B) Nominal output will double but real output will remain unchanged.
C) Real aggregate output will double.
D) Nominal output will double but real output will fall.
Transcribed Image Text:1. The velocity of money is: A) real GDP divided by the real quantity of money. B) nominal GDP divided by the nominal quantity of money. C) real GDP divided by the nominal quantity of money. D) nominal GDP divided by the real quantity of money. Show Transcribed Text 2. According to the loanable funds model, contractionary monetary policy: A) shifts the supply curve for loanable funds to the left. B) shifts the demand curve for loanable funds to the left. C) shifts the demand curve for loanable funds to the right. D) shifts the supply curve for loanable funds to the right. Show Transcribed Text 3 Show Transcribed Text 3. Monetary neutrality implies that in the long run: A) aggregate supply is independent from monetary policy. B) changing the money supply does not have any effect on the aggregate price level. C) aggregate demand is independent from monetary policy. D) monetary policy does not affect the level of economic activity. Ć 3 C 4. Assume the following hypothetical example. The money supply doubles, followed by a doubling of the wage rate and the price level. Under these circumstances, we can safely conclude which of the following? A) Real aggregate output will fall in half. B) Nominal output will double but real output will remain unchanged. C) Real aggregate output will double. D) Nominal output will double but real output will fall.
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