The quantity theory of money predicts that, in the long run, inflation results from theOA. velocity of money growing at a faster rate than real GDP.B. velocity of money growing at a slower rate than real GDP.OC. money supply growing at a slower rate than real GDP.O D. money supply growing at a faster rate than real GDP.

The quantity theory of money is a macroeconomic theory that states that the general price level of…

The quantity theory of money predicts that, in the long run, inflation results from the OA. velocity of money growing at a faster rate than real GDP. OB. velocity of money growing at a slower rate than real GDP. OC. money supply growing at a slower rate than real GDP. OD. money supply growing at a faster rate than real GDP.

The quantity theory of money predicts that, in the long run, inflation results from the OA. velocity of money growing at a faster rate than real GDP. OB. velocity of money growing at a slower rate than real GDP. OC. money supply growing at a slower rate than real GDP. OD. money supply growing at a faster rate than real GDP.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Money Growth And Inflation

Section: Chapter Questions

Problem 1PA

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The demand for money increases and the demand for money curve shifts rightward if a. the price level falls. b. the nominal interest rate increases. the real interest rate increases. O C. O d. the inflation rate increases. O e. real GDP increases.
All of the following shift the demand for money curve EXCEPT O a. an improvement in financial technology. O b. a rise in the nominal interest rate. a decrease in real GDP. O d. an increase in the price level. O e. an increase in real GDP.
With a constant rate of inflation and an increasing money supply, interest rates can remain stable because... a. The rising price level is increasing the demand for money, offsetting the impact of the rising money supply. O b. The declining interest rates cause the investment demand curve to shift to the left, which causes interest rates to rise. Oc. The rising price level is decreasing the demand for money which is pushing interest rates up. O'd. The declining interest rates cause the investment demand curve to shift to the right, which causes interest rates to rise. O e. The money transmission mechanism does not apply in a situation of sustained inflation.
When the velocity of money is independent of the price level, the interest rate, the money supply and the level of real GDP. the quantity theory predicts that Select one: a.The growth rate of real GDP = Growth rate of money supply + Inflation rate O b. The inflation rate if positive when the growth rate of money supply = growth rate of real GDP c. The inflation rate is positive when the growth rate of the money supply is less than the growth rate of GDP d. growth rate of real GDP + inflation rate = Grow rate of money supply Oe The inflation rate is constant. Please I need it with explanation and fast
Consider the historical debate between Keynesians and Monetarists regarding the effectiveness of monetary policy in changing real GDP. A change in the money supply would have no short-run effect on real GDP when OA. the money demand curve is vertical. OB. the money supply curve is horizontal. C. the money demand curve is horizontal. O D. the money supply curve is vertical. Interest rate Interest rate MM (i) Changes in the money supply effective .MD Quanti Money MAM Quantity of money Interest rate (ii) Changes in the money supply ineffective .MD Interest rate Investment 11 Investment סן
Assume, in the 3rd quarter of 2018 in the U.S., the velocity of money was 3.08 and the M2 money supply was $1,050 million. The average prices in the economy was $1.44. Based on this, what was the real GDP of the U.S. in the 3rd quarter of 2018. O a. $2,750 million O b.$1,250 millon Oc. $2,000 million O d. 52.250 million
When households and firms start selling off their bonds, which of the following will be the result? a. The market price of bonds increases. O b. The money demand curve shifts leftward. C. The nominal interest rate falls. O d. The nominal interest rate rises. е. The money supply curve shifts leftward.
According to the Quantity Theory of Money, if the velocity of money is constant, and if the money supply increases, while at the same time real GDP decreases, then, ceteris paribus, it follows that in the long run: Select one: O a. the price level will increase - i.e. the economy will experience inflation. O b. the price level will decrease - i.e. the economy will experience deflation. O c. nominal GDP must be decreasing. O d. none of the above is mathematically possible.
When the economy is in a liquidity trap, expansionary monetary policy is ineffective with respect to income because Select one: a. the public is willing to hold any amount of money being offered at the current rate of interest. O b. the public already holds all the money they want. O c. investment is insensitive to changes in the rate of interest. O d. the real demand for money is insensitive to changes in the rate of interest.
An increase in the nominal interest rate would O a. encourage people to hold smaller money balances. O b. encourage people to hold larger money balances. O c. force the Fed to reduce the money supply. d. cause the real interest rate to decline.
The quantity theory of money begins with the equation of exchange, MV = PY, and then adds the assumptions that Select one: A. velocity and potential GDP are independent of the quantity of money. B. potential GDP and the price level are independent of the quantity of money. C. velocity and the price level are independent of the quantity of money. D. potential GDP and the quantity of money are independent of the price level. O E. velocity varies inversely with the interest rate, and the price level is independent of the quantity of money.
How does the quantity theory of money help us to understand the process of deflation? The quantity theory of money tells us that OA there is no relationship between the inflation rate and the money growth rate B. the inflation rate will be negative if the money growth rate is lower than the real GDP growth rate OC. the inflation rate cannot be negative if the real GDP growth rate is positive OD. a change in the money growth rate brings an equal and opposite change in the inflation rate