The equation of exchange can be written as
A. velocity × nominal GDP = price index.
B. real GDP × price index = money supply.
C. money supply × price index = real GDP.
D. money supply × velocity = nominal GDP.
Answer: D
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As Sally increases her consumption of a good, she experiences diminishing marginal utility if her total utility
A) increases at a constant rate. B) increases at a decreasing rate. C) increases at an increasing rate. D) decreases.
Which of the following is a reason for the law of increasing opportunity cost? a. Some goods have limited alternative uses
b. Not all resources are equally adaptable to other uses. c. Prices of specific final goods increase as more of those goods are produced. d. Prices of specific final goods decrease as more of those goods are produced.
Contractionary policies are policies designed to
A) increase the level of real GDP. B) increase the federal deficit. C) reduce the level of real GDP. D) increase government spending.
Above-normal profits earned by existing firms in a perfectly competitive market will eventually lead to:
a. exit of the firms from the market. b. an increase in the market price of the good. c. entry of new firms into the market. d. a decrease in the aggregate supply. e. the existing firms emerging as price makers.