Monetary neutrality-what is the velocity of money

Assignment Help Business Economics

Reference no: EM13837084

1. According to the principle of monetary neutrality:

a. Changes in the money supply do not affect real variables.

b. Real variables do not affect nominal variables.

c. Nominal variables are not adjusted for inflation and real units are adjusted for inflation.

d. Nominal variables are expressed in monetary units and real variables are expressed in physical units.

2. The velocity of money is:

a. The speed at which the money multiplier works.

b. The speed at which prices rise in the economy.

c. The time it takes for checks to be cleared by the Fed.

d. The rate at which money changes hands.

3. If the Fed increased the supply of money, and velocity remains unchanged, according to the quantity equation:

a. P x Y must decrease.

b. Y must decrease.

c. P x Y must increase.

d. Y must increase.

4. When inflation turns out to be higher than expected, borrowers will be ________ off, and lenders will be ________ off.

a. Better, better

b. Better, worse

c. Worse, worse

d. Worse, better

5. Suppose the value of goods and services produced in an economy is $10 billion, but the total money supply is $1 billion, what is the velocity of money?

a. 0

b. 1

c.5

d. 10

6. The quantity theory of money states that:

a. All else equal an increase in money growth will lead to a proportionate increase in prices in the long-run.

b. All else equal an increase in money growth will lead to a proportionate increase in prices in the short-run.

c. An increase in money growth can lead to inflation if and only if velocity is constant.

d. An increase in money growth must lead to a decrease in velocity.

7. In a country with hyperinflation, the value of money

a. Is increasing over time.

b. Is decreasing quickly over time.

c. Is remaining constant.

d. May either be increasing or decreasing.

Reference no: EM13837084

Questions Cloud

Incorporate employee relations doctrines : Incorporate employee relations doctrines

Import tariffs that president bush placed on imported steel : The import tariffs that President Bush placed on imported steel likely had what effect?

Compete in a cournot duopoly : Firms 1 and 2 compete in a Cournot duopoly. If firm 2 adopts a strategy that raises firm 1's marginal cost:

Produce at a lower cost than a potential entrant : Predatory pricing is easy to prove in a court of law. An incumbent firm may experience a learning curve that allows it to produce at a lower cost than a potential entrant. A firm receives no individual benefit from strategies that raise the marginal ..

Monetary neutrality-what is the velocity of money : According to the principle of monetary neutrality: If the Fed increased the supply of money, and velocity remains unchanged, according to the quantity equation: Suppose the value of goods and services produced in an economy is $10 billion, but the to..

Why the manufacturer of the air conditioner breached? : the manufacturer of the air conditioner breached?

Basic information security mode-critical thinking questions : How could our information infrastructure been more secure if the underlying Internet incorporated security technologies such as encryption?

Same product is offered in different shops with prices : Jane wants to buy a beautiful doll as a gift for her sister's birthday. She knows that the same product is offered in different shops with prices of $120, $100, and $80 with odds of one-third of finding each price. She just stopped at a shop and know..

About the two gambles : Tim is offered two gambles. With gamble A, he either gains $2 or loses $1 with a 50 percent probability. With gamble B, he either gains $3 or loses $2 with a 50 percent probability. Tim prefers gamble B to gamble A. What can we conclude?

User Account

All Pages