Suppose nominal GDP is $14 trillion and the money supply is $2 trillion. What is the velocity of money?
A) 0.143
B) 7
C) 12
D) 28
B
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Marginal utility theory implies that, starting from consumer equilibrium, a rise in income will __________.
A decrease in taxes will have no effect on real GDP if
A) the tax decrease is offset by an increase in government spending. B) people look at changes in taxes only in the present. C) the Ricardian equivalence theorem holds. D) there is no crowding out.
In the long run ________
A) the amount of output an economy can produce is determined by real variables like capital, labor and technological advances B) aggregate supply is fixed at the potential level of output C) there is enough time for prices to fully adjust so the classical dichotomy holds D) all of the above E) none of the above
Assume that foreign capital flows from a nation increase due to political uncertainly and increased risk. If the nation has highly mobile international capital markets and a fixed exchange rate system, what happens to the quantity of real loanable funds per time period and the nominal value of the domestic currency in the context of the Three-Sector-Model? a. The quantity of real loanable funds
per time period rises and nominal value of the domestic currency falls. b. The quantity of real loanable funds per time period falls and nominal value of the domestic currency remains the same. c. The quantity of real loanable funds per time period rises and nominal value of the domestic currency remains the same. d. The quantity of real loanable funds per time period rises and nominal value of the domestic currency rises. e. There is not enough information to determine what happens to these two macroeconomic variables.