Multiple Choice
Figure 34-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.
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-Refer to Figure 34-2.Assume the money market is always in equilibrium,and suppose r1 = 0.08;r2 = 0.12;Y1 = 13,000;Y2 = 10,000;P1 = 1.0;and P2 = 1.2.Which of the following statements is correct? When P = P2,
A) investment is lower than it is when P = P1.
B) nominal output is higher than it is when P = P1.
C) the expected rate of inflation is higher than it is when P = P1.
D) the velocity of money is higher than it is when P = P1.
Correct Answer:
Verified
Correct Answer:
Verified
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