Using the equation of exchange, if real GDP increases by 3.0%, the velocity of money grows by 1.0% and the growth rate of money is 3.0%; what is the rate of inflation?
A. It is constant or a 0% change
B. +1.0%
C. -1.0%
D. It is the same as the growth rate of money, or 3.0%
Answer: B
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A) equal to zero. B) between zero and one. C) equal to one. D) greater than one.
Regulatory forbearance
A) meant delaying the closing of "zombie S&Ls" as their losses mounted during the 1980s. B) had the advantage of benefiting healthy S&Ls at the expense of "zombie S&Ls," as insolvent institutions lost deposits to health institutions. C) had the advantage of permitting many insolvent S&Ls the opportunity to return to profitability, saving the FSLIC billions of dollars. D) increased adverse selection dramatically.
Refer to the above table. Suppose the demand for smartphones rises because more people use the Internet with a smartphone. The new equilibrium price will be
A) $200. B) $275. C) more than $275. D) impossible to be determined given the information.
Identify some of the possible transactions costs involved in an exchange of a used car between two individuals