The quantity theory of money implies that over the long run, the inflation rate will ________
A) equal the nominal interest rate
B) equal the growth rate of M2 minus the growth rate of real output
C) equal the growth rate of M2 plus the growth rate of real output
D) equal the velocity of money
B
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A bank run occurs when:
A) a bank experiences an extraordinarily large volume of withdrawals. B) a bank sells its assets to its own stockholders. C) the central monetary authority regulates the functioning of banks. D) a bank's assets exceeds its liabilities.
An undervalued domestic currency:
A) harms all the economic agents in the country. B) benefits all the economic agents in the country C) makes imports more expensive for domestic consumers. D) can be achieved by buying the domestic currency.
A government fulfills a protective function when it
A) provides funds for flood control projects and builds highways. B) prevents illegal seizure of private property. C) established and enforces minimum wage laws. D) taxes some citizens in order to provide income transfers to others.
Suppose a bank has $200,000 in deposits and a reserve ratio of 15 percent. Its required reserves are:
A. $350. B. $1,500. C. $3,000. D. $30,000.