CH12
demand for money increases
During an economic expansion when real GDP increases, the
the nominal interest
Every day, ________ changes to make the quantity of money demanded equal the quantity of money supplied.
increases, rises
Shoeminus−leather costs arise from inflation because the velocity of circulation of money ________ as the inflation rate ________.
forego interest on an alternative asset
The opportunity cost of holding money is that you
money
The proposition that in the long run when real GDP equals potential GDP, an increase in the quantity of money leads to an equal percentage increase in the price level is the called the quantity theory of
the price level
The quantity of money demanded is proportional to
nominal, increases
The quantity of money demanded will decrease if the _______ interest rate _______.
the nominal interest rate
When the Fed changes the quantity of money, there is an immediate effect on
people want to hold less money
When the opportunity cost (or value) of holding money increases, then
an increase, an increase
An increase in the price level leads to ________ in the demand for money and an increase in real GDP leads to ________ in the demand for money.
confusion costs.
If inflation is making it difficult for people to estimate the true marginal benefits and true marginal costs of activities, inflation is leading to
4. [(p multiplied by y) / quantity of money] = 6.0 t / 1.5 = 4
If nominal GDP is $6.0 trillion and the quantity of money is $1.5 trillion, then the velocity of circulation is
increases
If the inflation rate increases, the velocity of circulation ________
the value of money
In the longminus−run, money market equilibrium determines
lowers, raises
In the long run, an increase in the quantity of money ________ the value of money and ________ the price level.
velocity of circulation
average speed that dollars circulate in an economy as people use them to buy goods and services.