According to the quantity theory of money, (a) Increases in the money supply will lead to inflation, ceteris paribus (b) The level of inflation is independent of the money supply (c) The money supply times the velocity equals the real GDP (d) When real GDP rises, the money supply must fall by the same proportion (e) The velocity of money is assumed to fluctuate widely over time
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- According to the quantity theory of money,
(a) Increases in the money supply will lead to inflation, ceteris paribus
(b) The level of inflation is independent of the money supply
(c) The money supply times the velocity equals the real
(d) When real GDP rises, the money supply must fall by the same proportion
(e) The velocity of money is assumed to fluctuate widely over time
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- A) What is the notable insight of the Quantity Theory of money? (a) An Increase in the quantity of money, ceteris paribus will result in inflation (b) A decrease in the quantity of money, ceteris paribus will result in inflation (c) An Increase in the quantity of goods and services, ceteris paribus will result in inflation (d) An Increase in the demand for money holding, ceteris paribus will result in inflation B) What is the primary purpose of the interest rate in Bagehot's rule? (a) To increase the revenue of the government (b) To decrease uncertainity (c) To eliminate moral hazard (d) To increase the revenue of the central bankThe speculative demand for money suggests that: (a) Individuals hold onto money for the purpose of engaging in transactions (b) As the rate of interest rate increases, the demand for money will rise (c) When the economy becomes more uncertain, people are more likely to hold unto money (d) The velocity of money is constant (e) As the rate of interest falls, the demand for money will rise.Empirical evidence that substantiates the Quantity theory includes which of the following? Select one or more: a. Countries with high rates of inflation over many years have high rates of growth of the money supply. b. In the US each year, the increase in the money supply is within a small margin of the increase in prices that year. c. Countries with high rates of inflation over many years have high rates of growth of real GDP. d. Countries with independent central banks tend to have high rates of inflation.
- The Quantity Theory of Money (QTM) states that ______. Note: the blank represents an entire phrase, not one word. (a) In the long run, an increase in the money supply will generate an equivalent increase in the velocity of money. (b) In the long run, an increase in the money supply will generate an equivalent increase in real GDP. (c) In the long run, an increase in the velocity of money will generate an equivalent increase in the price level. (d) In the long run, an increase in the money supply will generate an equivalent increase in the price level.Inflation is caused as a result of A) decrease in the money supply without a corresponding decrease in production. B) fall in production. c) increase in the money supply without a corresponding increase in production. D) increase in the money supply.In recent discussion, attention was devoted to the role of the central bank, the quantity theory of money, and the relationship between the money supply and inflation. Please answer the following two questions: A. One of my favorite economists, Milton Friedman, is attributed with the quote: "Inflation is everywhere and always a monetary phenomenon." Explain its meaning, relate it to the quantity theory of money, and explain the quantity theory of money. B. Why might it be in the federal government's benefit to generate inflation?
- Which of the following will cause the demand curve for money to shift to the right? (a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.In the quantity theory of money, velocity is assumed A) to increase with increases in the money supply. B) to equal 1.4. C) constant. D) to be a declining number. Velocity is A) not constant if the demand for money depends on the interest rate. B) infinite C) zero If the demand for money depends on the quantity theory of money A) interest rate; does not hold C) level of GDP; still holds If the equation for the for money depends on nominal income but not the interest rate. D) constant and the velocity is not constant, then the B) interest rate; still holds D) level of GDP; does not hold is looked on as a demand-for-money equation, then the demanc A) unanticipated inflation rate C) Keynesian income-expenditure model Monetarists and Keynesians impact of fiscal policy on the economy. A) agree; agree C) disagree; disagree B) real business cycle theory D) quantity theory of money For price stability, monetarists argue that the money supply should grow at a rate average growth of real output.…the consumer price index can be used to measure inflation. there are potential problems with this process though that can result in inflation being overstated or understated. place each statement to according if it would cause inflation to be overstated, understated, or be an accurate representation of inflation. causes inflation to be overstated causes inflation to be understated does not cause inflation to be overstated or understated Answer BANK: Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS and better fuel economy. Donna, a confirmed chocoholic, notices that her favorite candy bar shrank in size, but its price stayed the same. Zach loves bagels, but bagels are becoming more expensive so he changes his breakfast routine to include a muffin instead because muffins remain relatively cheap. Chris is an avid…
- In countries with extremely high inflation, increases in the money supply: A) are quickly translated into changes in the inflation rate. B) do not affect the price level. C) will decrease real GDP. D) will increase real GDP.Which of these assumptions does the Quantity Theory of Money depends on? Velocity of money is stable and GDP is at full employment. Real GDP depends upon the supply of resources and full employment is achieved. Real GDP depends upon the supply of resources and velocity of money is stable. There is government budget balance and trade balance in net exports.If the money supply (M) is $300, the real GDP (Q) is 200, the velocity of money (V) is 6, the interest rates is 5% and the inflation rate is 3%, then calculate nominal GDP.