In an economy in which velocity is constant and the level of real output grows a

Question

In an economy in which velocity is constant and the level of real output grows at an average rate of 3 percent per year, a 5 percent average rate of growth in the money supply would result in a Question 8 options:

slowly increasing price level (inflation)

stable 4 percent growth in real GDP

stable 4 percent growth in nominal GDP

constant price level

slowly decreasing price level (deflation)

If interest rates __________, investment spending tends to __________ and Gross Domestic Product to __________.

Question 9 options:

rise; fall; fall

rise; rise; rise

rise; fall; rise

fall; rise; fall

fall; fall; rise

When the Fed successfully decreases the money supply, GDP

Question 10 options:

increases because the resulting increase in the interest rate leads to a decrease in investment

increases because the resulting decrease in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to a decrease in investment

decreases because the resulting decrease in the interest rate leads to an increase in investment

rise; fall; fall

rise; rise; rise

rise; fall; rise

fall; rise; fall

fall; fall; rise

When the Fed successfully decreases the money supply, GDP

Question 10 options:

increases because the resulting increase in the interest rate leads to a decrease in investment

increases because the resulting decrease in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to a decrease in investment

decreases because the resulting decrease in the interest rate leads to an increase in investment

Explanation / Answer

8)

slowly increasing price level

Explanation:

we know

M*V=P*Q

5%*V=P*3%

As V will not change, we will see rise in price levels around 2% to equal the equation.

we do only first question as per chegg guidelines

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