If nominal GDP is 8,100 billion florins and the money supply is 900 billion florins, the velocity of circulation is
A. 900.0.
B. 90.0.
C. 81.0.
D. 9.0.
E. 8.1.
Answer: D
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For a fixed target real interest rate and target inflation rate, when inflation decreases, the Fed ________ interest rates, hence ________ short-run equilibrium output.
A. increases; increasing B. decreases; decreasing C. decreases; increasing D. increases; decreasing
In perfect competition, no individual producer can influence price because
a. each contributes an insignificant amount to total supply. b. they are ignorant of the market price. c. it is set by monopolists. d. it is regulated by the government.
Elsie owns a dairy farm and Elmer is a baker. If Elsie trades butter and milk for some of Elmer's pies than: a. Elsie is the only one that gains from the trade
b. Elmer is the only one that gains from the trade. c. Elsie and Elmer are both made better off by the trade. d. Both Elmer and Elsie are made worse off by the trade.
Refer to the graph shown. Monetary policy that shifts the AD curve from AD0 to AD2 is
A. contractionary. B. neither expansionary nor contractionary since it does not affect output. C. expansionary. D. neither expansionary nor contractionary since it does not affect inflation.