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A rapid rate of growth of money results in
a. constant
b. depression.
c. inflation.
d. recession.
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Solved in 2 steps
- Based on the money market model, when real GDP increases, the equilibrium interest rate should Select one: a. increase the same percentage as the money supply increase. b. increase. c. stay the same. d. decrease.d. i. Identify one monetary policy action that could counter the increase in investments.ii. Using a correctly labelled money market graph, show how this policywill affect nominal interest rates.Which of the following statements are true about the velocity of money? Choose one or more: A. Velocity is part of the equation of exchange. B. Velocity is the number of times a unit of currency exchanges hands in a given year. C. An increase in velocity, all else being equal, increases real GDP. D. An increase in velocity, all else being equal, increases nominal GDP.
- 1. What are the requirements for a sound financial system? 2. The great economist Milton Friedman has said that “inflation is always and everywhere a monetary phenomenon." Explain. 3. Would a peso today be worth more to you than a peso tomorrow? 4. Is inflation necessarily always a bad thing? 5. How do the disinflationary policies differ depending on the causes of inflation? 6. How does an increase in interest rates affect business? Consumers? 7. In what way can inflation distort purchasing power over time for individuals? 8. From Mishkin (2018), pp. 46: Some economists suspect that one of the reasons economies in developing countries grow so slowly is that they do not have well - developed financial markets. Does this argument make sense? 9. From Mishkin (2018), pp. 47: How do conflicts of interest make the asymmetric information problem worse? 10. From Mishkin (2018), pp. 60: In person, cigarettes are sometimes used among inmates as a form of payment. How is it possible for…Which of the following statements about money that is correct? A. Inflation brings a rising value of money. B. A work of art is an example of money because it can act as a store of value. C. Money is a completely stable store of value. D. Without a medium of exchange, goods and services must be exchanged directly for other goods and services.the money supply of Freedonia this year is $150 billion nominal GDP is $750 billion .assuming that velocity of money is stable. real GDP gross 2%this year. and money supply does not change what are the velocity, price level, and inflation rate
- Interest rates fall as the supply of money increases because a.businesses want to borrow more when the money supply increases. b. Aggregate demand increases. c. The demand curve for money slopes down. d. The demand curve for money shifts to the right.According to the quantity theory of money, if there is a significant increase in money supply there will be an increase in the a. Unemployment rate b. Loanable funds market c. Price level d.Real interest rateWhen the money market is depicted in a diagram with the value of money on the vertical axis, what would shift money demand to the left? a. an increase in the price level b. a decrease in the price level c. a decrease in real GDP d. an increase in real GDP ہے
- What is the effect of inflation on the real value of money? a. Decrease b. Not related c. No effect d. Increase32. An economy is currently producing above Potential Output. An Increase in the Money Supply will: A. Increase Spending, Output, and Inflation more B. Move the Economy back to Potential GDP C. Do nothing D. Decrease Inflation, Lower Interest Rates, Increase SpendingAll else equal, suppose the interest rate rise from 3% to 3.5%. What will happen in the supply of money? a. Shifts to the right. b. Shifts to the left. c. An upward movement along the supply curve. d. An downward movement along the supply curve. e. The supply will remain unchanged.
