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 Text2. 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 Text3Show Transcribed Text3. 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.Ć3C4. Assume the following hypothetical example. The money supply doubles, followed by adoubling of the wage rate and the price level. Under these circumstances, we can safelyconclude 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.

DISCLAIMER “Since you have asked multiple questions, we will solve the first question for you. If…

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.

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.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.2P

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Question

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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