When nominal interest rates are high, the velocity of money should:
A. not change; the velocity of money does not vary with the interest rate.
B. decrease by the same percent that the nominal interest rate has increased.
C. also be high.
D. be low.
Answer: C
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Indicate whether the statement is true or false
An increase in the real exchange rate indicates that
A) domestic goods are now relatively cheaper. B) domestic goods are now relatively more expensive. C) foreign goods are now relatively cheaper. D) both B and C
For which of the following is demand most likely to be perfectly inelastic?
a. BMW automobiles b. Pepsi Cola c. hot dogs d. insulin e. Tylenol
If an allocation of resources is efficient, then
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