What direction of change in velocity could explain the price level increasing by a smaller percentage than the money supply? What would this change in velocity imply about the frequency with which money changes hands?
A decrease in velocity. A decline in velocity means that money changes hands less frequently.
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Which of the following would be expected to decrease the demand for money in the U.S.?
A. The economy enters a boom period. B. Grocery stores begin to accept credit cards in payment. C. Political instability increases dramatically in developing nations. D. Households fear increasing computer glitches will severely limit their ability to use ATMs.
Increased production, but not increased inflation, will result in higher:
a. nominal GDP. b. money GDP. c. real GDP. d. current dollar GDP.
Which of the following will create a demand for or a supply of currencies?
a. Trade in goods b. Trade in services c. Trade in financial instruments d. Any of the above.
Because households have limited incomes, they must
a. rarely take vacations b. live below the poverty line c. allocate their spending carefully d. gamble in casinos frequently e. save for the future