The equation of exchange ________
A) states that the quantity of money multiplied by velocity must equal nominal income in a given year
B) describes a relationship that is true by definition
C) shows that real GDP must equal real money balances times the number of times a dollar turns over in a year
D) all of the above
E) none of the above
D
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A perfectly competitive firm will be willing to produce even at a loss in the short run, as long as
A. the loss is smaller than its total variable costs. B. the loss is smaller than its marginal costs. C. price exceeds marginal costs. D. the loss is smaller than its total fixed costs.
Which of the following is a correct characterization of socialism?
a. Central planning is used to answer the basic economic questions. b. Government ownership of many resources and centralized decisionmaking answers the basic economic questions. c. Markets are used exclusively to answer the basic economic questions. d. Tradition answers the basic economic questions.
The positive feedback from aggregate demand to investment is called
a. the investment multiplier. b. the crowding-out effect. c. the investment accelerator. d. the crowding-in multiplier.
If the price of a good decreases by 3 percent and total revenue increases, the elasticity of demand for the good could possibly be
A. 1.3 B. 1 C. 0.8 D. 0.2 E. 0