If M = 12,000 . P = 3, and Y = 32,000 . then velocity =
a. 1.125 . Velocity will rise if money changes hands more frequently.
b. 1.125 . Velocity will rise if money changes hands less frequently.
c. 8 . Velocity will rise if money changes hands more frequently.
d. 8 . Velocity will rise if money changes hands less frequently.
c
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A financial market in which only short-term debt instruments are traded is called the ________ market
A) bond B) money C) capital D) stock
Traditional Keynesian economists believed that:
a. the aggregate supply curve is a vertical line at a fixed level of prices. b. an increase in aggregate demand would cause a change in the price level. c. the government should take an active role in the economy to restore equilibrium. d. changes in aggregate demand does not determine equilibrium real GDP. e. the private sector is not an important source for shifts in aggregate demand.
According to rational expectations theory: a. a large reduction in unemployment can be achieved with a relatively small increase in inflation
b. people are not easily fooled by changes in government fiscal policy. c. inflation rates that rise 3 percentage points each year will keep unemployment below its natural rate for a sustained period of time. d. the Phillips curve will slope downward to the right, if people correctly anticipate the inflation rate.
To compare the GDP of countries with different currencies, it is necessary to convert to a “common denominator” often referred to as _______.
a. purchasing power parity (PPP) b. exchange rate c. GDP per capita d. GDP