Thank you for your help! I would really appriciate it. QUESTION 25 Which choice

Question

Thank you for your help! I would really appriciate it.

QUESTION 25 Which choice is true? A higher interest rate causes lower investment, higher demand, and higher real GDP A lower interest rate causes lower investment, higher demand, and higher real GDP A higher interest rate causes higher investment, lower demand, and lower real GDP A higher interest rate causes lower investment, lower demand, and lower real GDP QUESTION 26 Hyperinflation occurs because of excessive consumption excessive investment. excessive growth in the money supply. excessive interest rates. QUESTION 27 Which of the following statements is false concerning policies to reduce inflation? They are likely to have a lower cost if people think that the central bank is credible. The costs are likely to exceed the benefits. They have permanent benefits. They are likely to be more credible if the government also makes an attempt to reduce the budget deficit. QUESTION 28 An increase in the money supply, holding all else constant will cause a decrease in the velocity of money no change to the velocity of GDP an increase in the velocity of money an increase in the velocity of GDP

Explanation / Answer

a) "D"

A higher interest rate causes lower investment, lower demand and lower GDP/

b) "C"

Excessive money supply.

c) "D"

The inflation measures are more credible if the government uses less budgetary deficit.

d) "C"

An increase in the Velocity of money.

e) "B"

The government monetizes the deficit.

f) "D"

The Fed buys the government bonds in the open market.  

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