(Solution)-According to the modern quantity theory of money

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46. According to the modern quantity theory of money an increase in the money supply will result in an increase in the nominal level of income untila) velocity is unchanged b) the interest rate returns to its original levelc) the demand for money rises by exactly the increase in the money supplyd) the price level increases by the same percentage as the money supply has increased47. The central bank and the government are working against each other if, as the government cuts taxes the central banka) sells government bonds b) lowers the discount ratec) increases the money supply d) decreases the legal reserve requirements48. A major advantage of monetary over fiscal policy is that monetary policya) can be put into effect more quickly b) affects all sectors of the economy equallyc) authorities are quicker to see the need for policyd) has a more direct and predictable impact on spending

 

Solution ID:10086466 | Question answered on 16-Oct-2016

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