You are watching: The velocity of money is the quizlet
c. Velocity refers to the rate at which the money supply turns over. Velocity plays a critical function in the amount concept of money because it is commonly incredibly secure. Its stcapacity suggests that inflation is led to by a change in the money supply.
Which of the complying with appropriately expresses the quantity theory of money?Select one:a. money × the price level = velocity × real outputb. money × velocity = price level × actual output c. velocity × genuine output = price level × moneyd. price level × velocity = genuine output
b. The quantity concept of money claims that the price level times real output is equal to the money supply times the velocity, or the number of times the money supply transforms over. Velocity is mostly steady. The implication for this fact is that rises in the money supply cause the price level to increase unmuch less real GDP boosts.
If the money supply increases by 10% and also genuine GDP boosts by 3%, prices will boost bySelect one:a. even more than 10%.b. 10%.c. 13%.d. much less than 10%.
d. Although tright here is a 10% increase in the money supply, tright here is a rise in actual GDP that partly compensates for the boost in money. Therefore the boost in prices would be something less than 10%. You deserve to view this in the quantity equation M × V = P × Y.
The extensively hosted idea that when the central financial institution creates money, prices climb is calledSelect one:a. NAIRU, or the natural price of unemployment.b. Okun"s law.c. the Friedman dilemma.d. the quantity theory of money.
d. The amount concept of money states that inflation is always caused by as well a lot money. When the Fed reasons the development rate of the money supply to boost much faster than the potential boost in genuine GDP, the result is inflation.
The quantity theory of money have the right to explainSelect one:a. hyperinflation, however not moderate inflation.b. moderate inflation, but not hyperinflation.c. moderate inflation and hyperinflation, but not deflation.d. modeprice inflation, hyperinflation, and also deflation.
d. The amount concept of money determines all the results on prices and output because of changes in the money supply, holding the velocity of money consistent.
The velocity of money is identified asSelect one:a. the rate at which the Fed boosts the money supply.b. the price at which money is being spent.c. the average number of times per year a dollar changes hands. d. the average number of times per year a dollar is spent on a consumer good.
c. The velocity of money determines on average just how many type of times a dollar is spent and also re-spent in one year.
FalseThe amount equation is written as M × V = P × Y, wbelow M is the money supply, V is the velocity of money, P is the price level, and also Y is output.
Suppose the U.S. economic situation is suffering a recession. Increasing the money supply will certainly provoke an growth.Select one:True False
TrueIn a recessionary economic situation, joblessness is high. Holding the velocity of money continuous and increasing the money supply will certainly cause a rise in manufacturing, income, and also equilibrium GDP. This chain of occasions will certainly cause a short-run development.
Increasing the money supply in an widening economic situation will the majority of likely causeSelect one:a. a rise in equilibrium GDP.b. an increase in the price level. c. a decrease in the unemployment price.d. even more financial development.
b. Due to the fact that joblessness is already low, raising the money supply will certainly just increase the price level and also push the economic situation into a recession.
Assume the velocity of money is organized consistent. According to the classic see of money,Select one:a. alters in the money supply will certainly impact either price or output.b. output is resolved in the long run, so transforms in the money supply will certainly just influence the price level. c. alters in the money supply will only impact output.d. changes in nominal variables will only influence real variables.
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b. The classic see of money holds output consistent in the lengthy run and assumes the velocity of money is continuous. So transforms in the money supply will certainly only impact the price level.
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