If when the money supply changes, real output and velocity do not change, then a 2 percent increase in the money supply
a. decreases the price level by 2 percent.
b. decreases the price level by less than 2 percent.
c. increases the price level by less than 2 percent.
d. increases the price level by 2 percent.
d
You might also like to view...
Explain how the short-run and long-run Phillips curves are related
What will be an ideal response?
Individuals derive utility from picnics, p, and kayak trips, k. Assuming that an individual's utility is U(p,k) = k0.5p0.5 and income is $100, what is the marginal rate of substitution (MRS) between picnics and kayak trips?
A) MRS = 1. B) MRS = -1. C) MRS = - D) There is no substitution because picnics and kayak trips are perfect complements.
According to the permanent income hypothesis, when income rises above the permanent income level, the household saves at a lower rate than the long-run MPS
a. True b. False Indicate whether the statement is true or false
Suppose that the federal funds rate and the discount rate are equal initially at 3%. If the discount rate is then lowered to 2.5%, to whom will a bank be more likely to go for a loan: the Federal Reserve or another bank? Explain your answer in detail, and be sure to mention the impact that this situation would have on the money supply