According to the quantity equation, if M increases by 3 per cent and V increases by 2 per cent, then:
A. real income increases by approximately 5 per cent.
B. the price level increases by approximately 5 per cent.
C. the nominal interest rate increases by approximately 5 per cent.
D. nominal income increases by approximately 5 per cent.
Ans: D. nominal income increases by approximately 5 per cent.
You might also like to view...
In a market economy, individuals have a strong incentive to develop their skills and provide others with resources, goods, and services that they value because these activities generally
a. improve the overall efficiency of the economy. b. increase aggregate output. c. lead to a higher personal income. d. provide additional tax revenue for the government.
Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F ? C. The price of clothing is always $1
If the price of food is $3, does a competitive equilibrium exist? If not, what will happen to the price of food?
If a nation is going to achieve and sustain a high rate of economic growth, it must
What will be an ideal response?
If the dollar rose by 35% relative to other currencies, our current account deficit would
A. rise sharply. B. rise slightly. C. not be affected. D. fall slightly.