According to the simple quantity theory of money in the AD-AS framework, when the money supply decreases, the result is __________ in Real GDP and __________ in the price level
A) no change; no change
B) a rise; no change
C) no change; a rise
D) a rise; a fall
E) no change; a fall
E
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Over time:
A. all three measures of money have increased, in general. B. hard money spiked up dramatically in 2008 in response to the financial crisis. C. M2 sped up its rate of increase starting around 1995. D. All of these are true.
"Near monies" are: a. included in the M1 definition of the money supply
b. highly liquid assets that are close substitutes for money. c. stocks, bonds, and real estate. d. U.S. notes and Federal Reserve notes.
Economists who accept the quantity theory of money favor a monetary rule because they believe the short-run effects of monetary policy are unpredictable and the long-run effects are on the price level, not real output.
Answer the following statement true (T) or false (F)
In an advertisement for credit cards, the statement is made, "Think of a credit card as smart money." An economist's reaction to this would be that a credit card is:
A. dumb money. B. simply money. C. actually better than money. D. not money.