During the 1970's, U.S. inflation averaged 7% each year and real GDP increased. Holding velocity constant and using the quantity equation, we conclude that
a. money growth must have been greater than the growth of real income.
b. money growth must have been less than the growth of real income.
c. prices fell during the 1970's.
d. output fell during the 1970's.
a
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If economists say that a 7 percent growth in the money supply will increase aggregate demand by 7 percent, they are assuming that velocity
a. will decrease. b. is constant. c. will increase. d. is unpredictable.
When currencies are viewed as assets, the price of a currency is its:
a. interest rate. b. exchange rate. c. inflation rate. d. growth rate.
Each of the following would increase the demand for U.S. dollars, shifting the demand curve for dollars to the right, EXCEPT:
A. an increased preference for U.S.-made goods. B. an appreciation of foreign currencies relative to the U.S. dollar. C. an increase in the real interest rate on U.S. assets. D. an increase in real GDP abroad.
the discount rate is the interest rate that
What will be an ideal response?