Quiz 7
the money supply growing faster than real GDP
according to the quantity theory of money inflation is caused by
money supply grows at a slower rate than real GDP
according to the quantity theory of money, deflation will occur if the
6%
according to the quantity theory of money, if the money supply grows at 6%, real gdp grows at 2% and the velocity of money is constant, then inflation will be?
Mo
currency and reserves
decrease not change
if a person takes $100 from his/her bank at home and puts it in his/her savings account then M1 will _______ and M2 will ___________
the velocity of money was fixed
the quantity theory of money was derived from the quantity equation asserting that
in the long run, but not in the short run
there is a strong link between changes in the money supply in inflation
money makes exchange easier, leading to more specialization and higher productivity
what is one of the most important benefits of money in an economy?
M2
M1 + savings deposit and individual money market account
M1
Mo + Demand deposits (checking account)
fiat money
little to no intrinsic value and is authorized by the central bank or governmental body
a large government budget deficits
one of the main reasons for hyperinflation episode is ...
borrowers will have to pay increasing amounts in real terms overtime
your roommate argues that he can think of no better situation than living in deflationary economy, as prices of goods and services would continuously fall. you disagree and argue that during a deflation, people can be made worse off because .....