13. Let M denote currency and demand deposits and B the stock of government bonds. Suppose that both money and government bonds serve as means of payment. The transaction velocity of Mis Vm and the transaction velocity of bonds is Vb. According to the Quantity Theory, the price level will be given by: a. Y/P = MVm + BVb d. Y/P = M + B b. PY=MVm + BVb e. PY = M/Vm + B/Vb c. Y/P = M/V + B/Vb 14. The Fisher equation predicts that a one percentage point increase of the inflation rate leads to the nominal interest rate and of the real interest rate. a. One percentage point increase; no change d. b. C. One percentage point decrease; no change One percentage point increase; one percentage point increase e. One percentage point decrease; one percentage point decrease No change; one percentage point increase of
13. Let M denote currency and demand deposits and B the stock of government bonds. Suppose that both money and government bonds serve as means of payment. The transaction velocity of Mis Vm and the transaction velocity of bonds is Vb. According to the Quantity Theory, the price level will be given by: a. Y/P = MVm + BVb d. Y/P = M + B b. PY=MVm + BVb e. PY = M/Vm + B/Vb c. Y/P = M/V + B/Vb 14. The Fisher equation predicts that a one percentage point increase of the inflation rate leads to the nominal interest rate and of the real interest rate. a. One percentage point increase; no change d. b. C. One percentage point decrease; no change One percentage point increase; one percentage point increase e. One percentage point decrease; one percentage point decrease No change; one percentage point increase of
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I need help with this questions with explanation
![13. Let M denote currency and demand deposits and B the stock of government bonds. Suppose that both money
and government bonds serve as means of payment. The transaction velocity of Mis Vm and the transaction
velocity of bonds is V. According to the Quantity Theory, the price level will be given by:
Y/P = M + B
PY = M/Vm + B/Vb
a. Y/P = MVm + BVb
b. PY=MVm + BVb
c. Y/P = M/Vm + B/Vb
d.
e.
14. The Fisher equation predicts that a one percentage point increase of the inflation rate leads to
the nominal interest rate and
of the real interest rate.
a.
One percentage point increase; no change
d.
b.
C.
One percentage point decrease; no change
One percentage point increase; one percentage
point increase
e.
One percentage point decrease; one
percentage point decrease
No change; one percentage point increase
of](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1f1874bf-4db6-459f-988b-8fa0a32e0b46%2Fdbd66a5d-8698-436c-9d2a-3731dfad25b6%2F7djkmeta_processed.jpeg&w=3840&q=75)
Transcribed Image Text:13. Let M denote currency and demand deposits and B the stock of government bonds. Suppose that both money
and government bonds serve as means of payment. The transaction velocity of Mis Vm and the transaction
velocity of bonds is V. According to the Quantity Theory, the price level will be given by:
Y/P = M + B
PY = M/Vm + B/Vb
a. Y/P = MVm + BVb
b. PY=MVm + BVb
c. Y/P = M/Vm + B/Vb
d.
e.
14. The Fisher equation predicts that a one percentage point increase of the inflation rate leads to
the nominal interest rate and
of the real interest rate.
a.
One percentage point increase; no change
d.
b.
C.
One percentage point decrease; no change
One percentage point increase; one percentage
point increase
e.
One percentage point decrease; one
percentage point decrease
No change; one percentage point increase
of
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