Suppose that the nominal quantity of money is $200 billion and the value of nominal GDP is $1 trillion. It must be the case that
A) the economy is suffering from inflation.
B) the average price paid for a "typical" good is $5.
C) there will be a shortage of money balances in the economy.
D) the velocity of circulation is 5.
D
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When the price of a good decreases:
A. the good becomes less expensive relative to other goods and the consumer's purchasing power increases. B. the good becomes less expensive relative to other goods and the consumer's purchasing power decreases. C. the good becomes more expensive relative to other goods and the consumer's purchasing power increases. D. the good becomes more expensive relative to other goods and the consumer's purchasing power decreases.
To speed up the economy, the Fed typically uses __________ monetary policy; and to fight against the high rate of inflation, the Fed typically uses __________ monetary policy.
a. expansionary; expansionary b. expansionary; contractionary c. contractionary; contractionary d. contractionary; expansionary
Refer to the figure below. The socially optimal quantity in this market is ________ units per day.
A. T B. W C. V D. U
A plot of points representing the rate of inflation and the unemployment for the United States since 1953 reveals that
A. there is an inverse relationship between the two variables. B. there is a positive relationship between the two variables. C. there does not appear to be any trade-off between the two variables. D. none of these.