Question

Multiple Choice please and thank you! The velocity of money can be calculated from the quantity...

Multiple Choice please and thank you!

The velocity of money can be calculated from the quantity equation with:

a.

PtYt Mt .
b.

PtYt .
c.

Mt .
d.

PtYt /Mt .
e.

Mt /Pt Yt .

Using the quantity equation, if Mt = $1,000, Pt= 1.1, and Yt = 100,000, then the velocity of money is:

a.

9.09.
b.

100,000.
c.

0.09.
d.

0.11.
e.

110.

According to the classical dichotomy, in the long run there is:

a.

zero inflation.
b.

complete separation of the nominal and real sides of the economy.
c.

no growth after the economy reaches the steady state.
d.

perfect connectivity between the nominal and real sides of the economy.
e.

accelerating economic growth.

Which of the following has NO effect on long-run economic growth?

a.

money
b.

population
c.

productivity
d.

institutions
e.

investment
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Homework Answers

Answer #1

1. C

PtYt/Mt

To calculate the velocity of money we divide the nominal value of output by the quantity of money. P is the price level and y id the quantity of output and M is the quantiy of money.

2. E

the velocity of money = PtYt/Mt

here , Pt=1.1 Y=1,00,00 and M =1000

PtYt/Mt

=1.1*1,00,000/1000=110

3. B

the nominal economy is completely seperate from the rel economy.

4. E

according to the solow growth theory , savings and investment has no effect on economic growth in the long run.

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