Assume that the Fed increases the money supply when there is substantial unemployment in the economy. According to the quantity theory of money, if velocity is constant, then:
a. the price level will decrease.
b. real GDP will decrease.
c. nominal GDP will increase.
d. nominal GDP will decrease.
e. real GDP will remain constant while price level will decrease.
c
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Technology transfer comes only from nations importing new capital goods in the current account
Indicate whether the statement is true or false
Suppose a bank has total assets of $4,000,000,000 and total deposits and other liabilities of $3,500,000,000. The bank's leverage ratio is
A) 11.2%. B) 12.5%. C) 14.3%. D) 87.5%.
Moral hazard occurs when contracts are written in such a way that
A) the interests of agent and principal converge. B) the interests of agent and principal diverge. C) agents will wish to maximize the principal's utility. D) production and risk-bearing efficiency are achieved.
When you rent a car, you might treat it with less care than you would if it were your own. This is an example of
a. market risk. b. moral hazard. c. adverse selection. d. risk aversion.