Asked by
Tia'rei Fesagaiga-Yagin
on Oct 12, 2024
Verified
According to crude versions of the quantity theory of money
A) the income velocity of money is highly variable in the short run.
B) a full employment rate of output is not characteristic of market equilibrium.
C) a 10-percent increase in the money supply will result in a 10-percent increase in the price level.
D) a 25-percent decrease in the money supply will result in a 25-percent decrease in velocity.
E) speculative motives are the major sources of the demand for money.
Income Velocity of Money
A measure of how quickly money in circulation is used for purchasing goods and services, calculated as the ratio of nominal GDP to a country's total money supply.
- Apprehend the linkage among money supply, the speed of its circulation, levels of prices, and output magnitude.
- Gain insight into how adjustments in the supply of money affect inflation and the equilibrium of the economy.
Verified Answer
LH
Learning Objectives
- Apprehend the linkage among money supply, the speed of its circulation, levels of prices, and output magnitude.
- Gain insight into how adjustments in the supply of money affect inflation and the equilibrium of the economy.