What factors influence the stability of velocity? Why is velocity's stability a crucial issue for assessing the effectiveness of monetary policy?
The velocity, or turnover rate, of money determines the relationship between the money supply and
nominal GDP through the equation of exchange. If changes in the money supply lead to unpredictable
changes in the velocity of money, the relationship between monetary growth and GDP growth becomes
uncertain.
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In the U.S., government expenditure accounts for
a. 10% of GDP b. 20% of GDP c. 40% of GDP d. government expenditure is not included in GDP
Compared to a sales tax, a value-added tax is _____
a. easier to calculate b. harder to collect c. easier to apply to investment goods d. easier to monitor
Margaret, who lives in Des Moines, has been saving for years in order to take a trip to England this summer. She would be happy if the dollar suddenly depreciates in value against the pound
a. True b. False Indicate whether the statement is true or false
As an individual's consumption of a good increases
A) his or her total utility increases. B) his or her marginal utility increases. C) the price of the good increases. D) All of the above answers are correct.