a 39. IfM-2,000,P-22 Date a. 6.75. b. 3.00 c. 1.33 d. 1.50 5, and Y- 6,000, what

Question

a 39. IfM-2,000,P-22 Date a. 6.75. b. 3.00 c. 1.33 d. 1.50 5, and Y- 6,000, what is velocity? 40. The claim that increases in the growth rate of the money supply increase interest rates is known as the a. Friedman Effect. b. Hume Effect. c. Fisher Effect. d. the inflation tax. nominal interest rates but not real 41. According to the classical dichotomy, which of the following increases when the money supply increases? a. the real interest rate b. real GDP c. the real wage d. the nominal wage. 42. In the context of aggregate demand and aggregate supply, the wealth effect refers to the idea that, when the price level decreases, the real wealth of households a. increases and as a result consumption spending increases. This effect contributes to the downward slope of the aggregate-demand curve. the aggregate-supply curve. investment spending decreases. This effect contributes to the downward slope of the aggregate-demand b. decreases and as a result consumption spending increases. This effect contributes to the upward slope of c. increases and as a result households increase their money holdings; in turn, interest rates increase and curve. d. decreases and as a result households increase their money holdings, in turn, interest rates increase and investment spending decreases. This effect contributes to the upward slope of the aggregate-supply curve. 43. In the context of the aggregate-demand curve, the interest-rate effect refers to the idea that, when the price le increases decreases; in turn, the real value of the dollar increases in foreign exchange a. the real value of money b. the real value of money decreases; in turn, interest rates increase, which decreases net exports. c. households increase their holdings of money, in turn, interest rates decrease, which reduces spending on markets, which decreases net exports investment goods. d. households increase their holdings of money; in turn, interest rates increase, which reduces spending or investment goods

Explanation / Answer

Ans39) A is the correct option. 6.75

V = PY/M so V = 2.25*6,000/2000 = 6.75

Ans40) C is the correct option. Fisher effect. Fisher effect describes the relationship between inflation and both real and nominal interest rates.

Ans41) D is the correct option. Nominal wage. changes in the money supply affect nominal variables, but not real variables

Ans42) A is the correct option. increases and as a result consumption spending increases. This effect contributes to the downward slope of the aggregated-demand curve.

Ans43) D is the correct option. households increase their holdings of money; in turn, interest rates increase, which reduces spending on investment goods.

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