Question
Finding these questions confusing: 1. The velocity of money is 20, real GDP is 100 and the money supply is 100. According to the quantity
Finding these questions confusing:
1. The velocity of money is 20, real GDP is 100 and the money supply is 100. According to the quantity theory of money, a 10 percent increase in the money supply causes a
O A. 20 percent increase in average prices.
O B. 10 percent increase in average prices
O C. 10 percent decrease in average prices.
O D. 5 percent decrease in real GDP.
O E. 20 percent decrease in velocity.
2. When there is stagflation, the relationship between inflation and unemployment is
O A. non - existent.
O B. positive.
O C. constant.
O D. inverse.
O E. negative.
3. An output gap is O A. positive during a recession. O B. positive during an expansion. O C. positive if real GDP is above potential GDP O D. negative if real GDP is above potential GDP. O E. negative during a recession.
4. The original Phillips Curve
O A. is a short - run relationship.
O B. shows an immediate trade - off between inflation and unemployment.
O C. assumes the natural rate of employment does not change over time.
O D. assumes inflation expectations do not change over time
O E. does all of the above
5. During periods of deflation, the
O A.value of housing rises.
O B. the value of money falls
O C. cost of living rises.
O D. value of housing falls.
O E. borrowers are better off than the lenders.
6. The quantity theory of money begins with the equation containing the money supply (M), velocity of money (V), average prices (P) and real GDP (Q), and then assumes that
O A. V is fixed and Q is fixed at real GDP.
O B. V is fixed and Q is fixed at nominal GDP.
O C. M does not change when V changes.
O D. V is fixed and Q is fixed at potential GDP.
OE. V does not change when Q changes
7. In Slugvia the domestic currency is the Drab. Aggregate income is 400 Drab. Consumer, business, and government spending on products and services are 300, 100, and 200 Drab respectively. Slugvia exports 500 Drab of products and services. Imports of products and services must be___Drab
O A. 700
O B. 300
O C. 500
O D. 600
O E. 400
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