If The Fed decides to buy bonds & securities in the open market, it will likely

Question

If The Fed decides to buy bonds & securities in the open market, it will likely Question 4 options:

increase the money supply and decrease aggregate demand.

decrease the money supply and decrease aggregate demand.

decrease the money supply and increase aggregate demand.

increase the money supply and increase aggregate demand.

The equation of exchange states that

Question 5 options:

money in circulation ´ prices = velocity ´ income

real GDP = prices ´ money in circulation ´ velocity

real GDP = money in circulation ´ velocity

nominal GDP = money in circulation ´ velocity

money in circulation ´ income = velocity ´ prices

According to the equation of exchange, if real GDP is $2 trillion and the money supply is $0.5 trillion, the velocity of money

Question 6 options:

cannot be determined unless we know the price level

must be 4 trillion

must be 4

must be 1/4 trillion

must be 1/4

money in circulation ´ prices = velocity ´ income

real GDP = prices ´ money in circulation ´ velocity

real GDP = money in circulation ´ velocity

nominal GDP = money in circulation ´ velocity

money in circulation ´ income = velocity ´ prices

According to the equation of exchange, if real GDP is $2 trillion and the money supply is $0.5 trillion, the velocity of money

Question 6 options:

cannot be determined unless we know the price level

must be 4 trillion

must be 4

must be 1/4 trillion

must be 1/4

Explanation / Answer

4. Option No. 4 is correct.

5.Option no.5 is correct.

6.Option no. 1 is correct.

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