Homework 7

If nominal GDP is $12 trillion, the price level is 120, and the quantity of money is $4 trillion, what is the velocity of circulation?

3

Which of the following does NOT describe a function of money?

barter

M2 ________.

is a broader measure of money than M1

Suppose that M = 300, P = 150, and Y = 6. Then the velocity of circulation equals

3

A unit of account

is an agreed measure for stating the prices of goods and services in an economy.

The functions of money are

medium of exchange, unit of account, and store of value.

When you bought your textbook for this course, you were using money as a

medium of exchange.

Using a credit card can best be likened to

taking out a loan.

Which of the following is included in M1?

the $200 in cash you used to purchase your textbooks

The velocity of circulation is

the average number of times a dollar of money is used in a year to buy goods and services in GDP

Barter is

the exchange of goods and services directly for other goods and services.

Which of the following applies to money when it serves as a store of value? Money is a store of value because it is an agreed measure for stating goods' prices. The more stable money's value, the better it serves as a store of value. III. When money serves as a store of value, it requires a double coincidence of wants.

II only

Which of the following is NOT included in M1?

saving deposits