The quantity theory of money:
A. provides a comprehensive explanation of inflation.
B. explains low inflation rates well but does not explain high inflation rates well.
C. does not explain inflation in the real world at all.
D. explains high inflation rates well but does not explain low inflation rates well.
Answer: D
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Which of the following is a primary objective of monetary policy?
A) achieving a zero natural rate of unemployment B) targeting a zero rate of inflation C) achieving price stability D) all of the above E) none of the above
If price elasticity is 3.25, then demand is
A) inelastic. B) elastic. C) unitary. D) negative.
The natural rate of unemployment
a. increases sharply during a recession but declines significantly during a business expansion. b. is the unemployment rate accompanying the economy's maximum sustainable output. c. is generally less than the unemployment rate associated with the economy's full-employment rate of output. d. is present when the economy operates at approximately 94 percent of its potential GDP.
Frictional unemployment refers to