Determining the equation of exchange

Reference no: EM131774397

Question: 1. Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (YP) in the long run? Select one:

a. If the money supply grows at a faster rate than growth in YP, there will be inflation.

b. If the money supply grows at a slower rate than growth in YP, there will be a decrease in the inflation rate.

c. If the money supply grows at the same rate as growth in YP, the price level will fall and there will be deflation.

d. If the money supply grows at the same rate as growth in YP, the price level will also increase at the same rate as growth in YP.

2. In this Lorenz Curve, the formula for the GINI coefficient is: (Yellow Area) / (Yellow Area + Green Area). If the Yellow Area is 0.1 and the Green Area is 0.4, what is the GINI coefficient? Select one:

a. 0.1

b. 0.2

c. 0.4

d. 0.5

e. 1.0

Reference no: EM131774397

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