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

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