In countries with extremely high inflation, increases in the money supply: A) are quickly translated into changes in the inflation rate. B) do not affect the price level. C) will decrease real GDP. D) will increase real GDP.
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In countries with extremely high inflation, increases in the money supply: |
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A) |
are quickly translated into changes in the inflation rate. |
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B) |
do not affect the price level. |
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C) |
will decrease real |
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D) |
will increase real GDP. |
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- Inflation is caused as a result of A) decrease in the money supply without a corresponding decrease in production. B) fall in production. c) increase in the money supply without a corresponding increase in production. D) increase in the money supply.An increase in the aggregate price level: A) increases the demand for money. B) shifts the demand for money to the left. C) does not affect the demand for money. D) decreases the demand for money.If the money supply (M) is $300, the real GDP (Q) is 200, the velocity of money (V) is 6, the interest rates is 5% and the inflation rate is 3%, then calculate nominal GDP.
- If we are close to or at full employment an increase in the money supply will lead mainly to: A. Change in quantity of output B. Increase in Price Level (Inflation) C. Decrease in Price Level (Deflation) D. Increase in Gross Domestic Product E. Decrease in Gross Domestic ProductDistinguish between the general inflation rate and the average inflation rate for specific goods?What is inflation? A) A decrease in the general price level B) An increase in the general price level C) A decrease in the money supply D) An increase in the money supply
- b. Suppose a country has a money demand function (M/P)d= kỲ, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. What is the average inflation rate?If a bank expects inflation to increase in the near future, how will it respond? It will start paying less interest on deposits. It will seek to reduce the amount of cash held in its vaults. It will temporarily scale back its efforts to gain new customers. It will start charging more interest on loans. It will temporarily suspend withdrawals.Most central banks, like the Bank of England, set targets for their economy's inflation rate. The Bank of England has an inflation target of 3.5% per year. According to the Quantity Theory of Money, by how much must the Bank of England grow the money stock in order to hit its inflation target? The Bank of England must decrease the money stock by 3.5% per year. The Bank of England must increase the money stock by 3.5% per year. The Bank of England must decrease the money stock by 3.5% per month. The Bank of England must increase the money stock by 3.5% per month.
- Which of the following will cause the demand curve for money to shift to the right? (a) An increase in real Gross Domestic Product (GDP).(b) A decrease in the repo rate.(c) An increase in the quantity of money available.(d) A decrease in the quantity of money available.The Canadian govt can reduce national dent by an interest and inflation policy which keeps the rate of inflation above the rate of interest. True/False/Uncertain.Does printing money and circulating the same in the economy always lead to an increase in inflation. Explain your position.