40) The existence of a natural rate of unemployment implies that in the long run P in the equation of exchange is unstable b. V in the equation of exchange is stable c. Q in the equation of exchange is stable d. M in the equation of exchange is unstable 41) Which of the following provides the correct policy targets of the three groups mentioned? a. Keynesians target nominal interest rates, monetarists target steady money growth, and the Fed targets a mix of the two b. Keynesians target steady monetary growth, monetarists target investment spending, and the Fed targets a mix of the two C. Keynesians target price stability , monetarists target the demand for money, the Fed targets a mixture of the two d. Keynesians target real output, monetarists target the velocity of money, and the Fed targets a mix of the two 42) How is the money demand or supply curve most likely to shift when the Fed sells bonds? a. Money demand shifts rightward b. Money supply shifts rightward c. Money supply shifts leftward d. Money demand shifts leftward 43) In a graph of investment demand, increasing the discount rate could best be represented by a. A movement down the investment curve b. A rightward shift of the investment demand curve C . A leftward shift of the investment demand curve 1. A movement up the investment demand curve 44) If the real interest rate is negative, then Inflation is likely above normal and unexpected b. Nominal interest rates are definitely negative C. Monetary policy is restrictive The anticipated rate of inflation is negative 45) If an economy is suffering from unusually high cyclically unemployment and the Federal Reserve sell bonds in the open market a. Demand pull inflation will likely occur b. The liquidity trap could prevent the policy from being effective c. Full employment may be restored . The economy will likely experience deflation 46) Inelastic demand for money implies that a. Changes in the money supply did not affect interest rates b. The economy is likely suffering from high rates of inflation c. Consumers and businesses likely have negative expectations d. Current equilibrium output is above full employment output 47) If the nominal gross domestic product of a nation is $300 billion and the money supply is $75 C billion, then the velocity of money is a. $225 billion b. .25