Exam 22: Quantity Theory, inflation and the Demand for Money

The average number of times that a dollar is spent in buying the total amount of final goods and services produced during a given time period is known as

Keynes's theory of the demand for money is consistent with ________ movements in ________.

The classical economists' contention that prices double when the money supply doubles is predicated on the belief that in the short run velocity is ________ and real GDP is ________.

Methods of financing government spending are described by an expression called the government budget constraint,which states the following

In the Baumol-Tobin analysis of transactions demand,scale economies imply that an increase in real income increases the quantity of money demanded ________,while an increase in the price level increases the quantity of money demanded ________.

The absence of money illusion means that

Tobin's model of the speculative demand for money shows that people hold money as a store of wealth as a way of

Keynes's liquidity preference theory indicates that the demand for money is ________ related to ________.

The Keynesian theory of money demand emphasizes the importance of

Fisher's quantity theory of money suggests that the demand for money is purely a function of ________,and ________ no effect on the demand for money.

If the government finances its spending by selling bonds to the central bank,the monetary base will ________ and the money supply will ________.

The Baumol-Tobin analysis suggests that

The speculative motive for holding money is closely tied to what function of money?

The view that velocity is constant in the short run transforms the equation of exchange into the quantity theory of money.According to the quantity theory of money,when the money supply doubles

Describe what the liquidity trap is.Explain how it can be problematic for monetary policymakers.

The classical economists believed that if the quantity of money doubled

Because Keynes assumed that the expected return on money was zero,he argued that people would

If the deficit is financed by selling bonds to the ________,the money supply will ________,increasing aggregate demand,and leading to a rise in the price level.

The portfolio theories of money demand state that the demand for real money balances is ________ related to income and ________ related to the nominal interest rate.

Financing government spending by selling bonds to the public,which pays for the bonds with currency,