The equation of exchange can be written as
a. Velocity × Nominal GDP = Price Index
b. Real GDP × Price Index = Money supply
c. Money supply × Price Index = Real GDP
d. Money supply × Velocity = Nominal GDP
d
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Refer to Figure 11.1. Assume the economy is in equilibrium at 1 = 0. Other things equal, an unexpected large increase in the price of oil will result in a movement from point ________ to point ________
A) A; B B) B; A C) A; C D) A; D
During a recession:
a. Net exports tend to rise. b. Consumption tends to rise. c. Net exports remain unchanged. d. Businesses tend to invest more in new plant and equipment. e. Inventories tend to fall as businesses sell them off.
Even-handed enforcement of contracts fuels economic prosperity because it
A) increases market uncertainty and the probability of contract violations. B) promotes gains from trade by keeping transaction costs low. C) permits individuals to invade or infringe on the property rights of others. D) increases transaction costs.
Refer to Figure 8.4. Up to Point A A) marginal costs are decreasing. B) marginal costs are increasing. C) average variable costs are decreasing. D) average variable costs are increasing.