6) According to the equation of exchange, which of the following are assumed to

Question

6) According to the equation of exchange, which of the following are assumed to be constant ? A) income and prices B) income and the velocity of circulation C) the money supply and prices D) the money supply and income E) none of the above are assume to be constant 7) According to the quantity theory of money, which of the following are assumed to be constant ? A) income and the velocity B) prices and income C) income and the money supply D) prices and the velocity of circulation E) none of the above are assumed to be constant 8) According to the Keynesian model, which of the following would result in a decrease in the rate of interest? A) a decrease in saving B) an increase in borrowing C) an increase in the money supply D) a decrease in the money supply E) none of the above

Explanation / Answer

Answer 6:

Option B. According to the equation of exchange, income and velocity of circulation are assumed to be constant.

Answer 7;

Option A. Income and velocity are assumed to be constant in Quantity theory of money.

Answer 8:

Option C. According to Keynes, an increase in the amount of money supplied will lead to decrease in the rate of interest.

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