1. An increase in per capita incomes is guaranteed by: Choose one answer. a. inc
ID: 1176792 • Letter: 1
Question
1. An increase in per capita incomes is guaranteed by:
Choose one answer.
a. increasing income slower than the population.
b. reducing population slower than income.
c. increasing income faster than the population.
d. increasing population faster than income.
2.Suppose velocity is constant but real GDP is not independent of the money supply. If this is the case, a 10 percent increase in the money supply will:
Choose one answer.
a. raise inflation by 10 percent.
b. raise inflation by less than 10 percent.
c. raise inflation by more than 10 percent.
d. have an unpredictable effect on inflation.
3.To deal with stagflation, economists who favor the institutionalist theory of inflation are likely to support an income policy rather than contractionary monetary or fiscal policies.
Answer: True / False
Explanation / Answer
1.)c. increasing income faster than the population.
2.)d. have an unpredictable effect on inflation.
Response:
If real GDP is not independent of the money supply as quantity theorists assume, then changes
in the money supply can affect real output, making it impossible to predict what the
consequences for inflation will be in this case.
3.)True
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