(Solution)-If rapid inflation occurs in a relatively full employment

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43. If rapid inflation occurs in a relatively full employment economy, well-coordinated monetary and fiscal policies would involvea) a budget deficit and central bank sales of bondsb) a budget surplus and central bank sales of bonds,c) a budget deficit and central bank purchases of bondsd) a budget surplus and central bank purchases of bonds44. In the past 40 years, there has been a generally consistent upward trend in velocity. According to the quantity theory of money, this impliesa) real GDP has risen less (%) than the money supply during this period 55b) real GDP has risen more (%) than the money supply during this periodc) nominal GDP has risen less (%) than the money supply during this periodd) nominal GDP has risen more (%) than the money supply during this period45. If you believe that velocity is constant and the AS curve is vertical, then according to the quantity theory of money, doubling the money supply should result in doubling ofa) nominal and real output b) the price level and real outputc) the price level with no change in real outputd) real output with no change in nominal output

 

Solution ID:10086469 | Question answered on 16-Oct-2016

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