Monetarists use the equation of exchange to predict the effects of changes in M on
A. velocity.
B. nominal GDP.
C. real GDP.
D. the price level.
Answer: B
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When there is an external cost, the unregulated market
A) overproduces the good or service. B) underproduces the good or service. C) reaches the most efficient solution. D) minimizes public welfare.
Any reserves held by a bank above the amount of minimum legal reserves are called
a. total reserves. b. required reserves. c. fiat money. d. excess reserves.
The built-in stabilizers in the economy tend to:
A. Fully offset irregular swings in real GDP B. Magnify somewhat the irregular swings in real GDP C. Dampen the irregular swings in real GDP D. Overcompensate for the irregular swings in real GDP
The crowding-out effect in an open economy ______.
a. is unaffected by global interactions b. is weaker than in a closed economy c. is stronger than in a closed economy d. is prevented by diplomatic regulations