If nominal GDP is $848 billion, and velocity of money is 4, how much is the money supply? If the GDP price index is 200, what is real GDP here?
What will be an ideal response?
$848 billion/4 = $212 billion = PQ, where Q is real GDP. If P = 2.00, then real GDP = $848/2.00 = $424 billion.
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The income-expenditure multiplier arises because one person's additional spending becomes another person's additional income that will generate additional:
A. cyclical unemployment. B. spending. C. autonomous expenditure. D. menu costs.
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Indicate whether the statement is true or false