The quantity theory of money implies that over the long run, the inflation rate will OA. equal the growth rate of M2 plus the growth rate of real output B. equal the nominal interest rate C. equal the velocity of money O D. equal the growth rate of M2 minus the growth rate of real output
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- Consider two economies, A and B, with the same constant growth rate of nominal money supply and a constant real interest rate r = 0.03. Also assume the economies' output grows at the same rate of 0.04. Which of the following comparisons is NOT valid? OA. If YAYB. then A= B B. The growth rates of the real demand for money in the two economies may not be the same. OC. The nominal interest rates of the two economies may may not be the same. OD. If YAY,B. then #A> #BThe demand for money arises out of the need to hold money as a medium of exchange. This demand for money is a function of A. precautionary; interest rates O B. transactions; national income C. speculative; interest rates O D. Precautionary; national incomeHow would the gum economy calculate its inflation rate? A. Inflation rate = Money growth - Velocity growth - Real GDP growth B. Inflation rate = Money growth - Velocity growth + Real GDP growth C. Inflation rate = Money growth + Velocity growth + Real GDP growth D. Inflation rate = Money growth + Velocity growth - Real GDP growth
- The money stock measured as M1 is growing at the rate of 5% per year. If real GDP is growing at 2% per year, and the income velocity of circulation of money is constant, Select one: the economy will achieve noninflationary growth O b. the inflation rate will be around 1%. O c. the inflation rate will be around 5% O d. the inflation rate will be around 3%.1.All would indicate that hyperinflation exists, except a. The general population regards monetary amounts in terms of relatively stable foreign currency. b. The cumulative inflation rate over three years is approaching or exceeds 100%. c. Inflation rates have exceeded interest rates in three successive years. d. The general population prefers to keep its wealth in nonmonetary assets. 2. Purchasing power gain or loss results from a. Monetary asset only b. Monetary liability only c. Both monetary asset and monetary liability d. Nonmonetary assets and nonmonetary liability 3. During a period of deflation, an entity would have the greatest gain in general purchasing power by holding a. Cash b. Property, plant, and equipment c. Finance lease liability d. Mortgage payableHow does the quantity theory of money help us to understand the process of deflation? The quantity theory of money tells us that OA there is no relationship between the inflation rate and the money growth rate B. the inflation rate will be negative if the money growth rate is lower than the real GDP growth rate OC. the inflation rate cannot be negative if the real GDP growth rate is positive OD. a change in the money growth rate brings an equal and opposite change in the inflation rate
- 1. Supposeyouhave$200,000inabanktermaccount.Youearn5%interestper annum from this account.You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses.2. TheAustralianBureauofStatistics(ABS)reportedinMay2017thatthecivilian population in Australia over 15 years of age was 20.8 million.Of this population of 20.8 million Australians, 13.5 million were employed and 0.7 million were unemployed.Calculate Australia’s labor force and the number of people in the civilian population who were not in the labor force? Also, with examples examine the causes of structural unemployment in Australia.a. Suppose growth rate of Real GDP is 6% and the growth rate of velocity is 3%. If Bangladesh Bank wants to have a 5 % inflation rate, what should be the growth rate of money supply according to the predetermined-money-growth-rate-rule? b. Suppose you got 2000 taka note as Eid gift from your uncle. What are the minimum increase and the maximum increase in the money supply that may result? Why they might be different? Assume the required reserve ratio is 10 percent. c From the equation of exchange, how would you explain the impact of rise in money supply to real GDP and price level? Consider velocity and real GDP are constant.14. If the expected inflation rate is 5% and negotiators agree that the real wages should rise by 7%, the two sideswill agree to an increase in the money wage ofA 2%B 5 %C 7 %D 12%
- How can a commercial bank "create" money? Select one: O a. by making loans O b. by increasing the rate of inflation O c. by issuing its own Central Bank bonds O d. by selling government Treasury bills to the commercial banks O e. by selling some of its foreign-currency reserves for domestic currencyJapan's money supply is growing rapidly at a 5.54% while real GDP is increasing at 8.29%. Japan's real interest rate is also growing at 4.46%. *we are assuming Quantity Theory of Money, Classical Dihotomy, and Fisher Effect effect are true. a. calculate the inflation rate b. calculate nominal interest rate c. calculate GDP growth rateWhen the velocity of money is independent of the price level, the interest rate, the money supply and the level of real GDP. the quantity theory predicts that Select one: a.The growth rate of real GDP = Growth rate of money supply + Inflation rate O b. The inflation rate if positive when the growth rate of money supply = growth rate of real GDP c. The inflation rate is positive when the growth rate of the money supply is less than the growth rate of GDP d. growth rate of real GDP + inflation rate = Grow rate of money supply Oe The inflation rate is constant. Please I need it with explanation and fast