Question

If nominal GDP is $48,000 million, and the money supply is $6,000 million, then the velocity of money is equal to

Question 33 options:

	1) 8
	2) 3.1
	3) 49.6
	4) 0.025

Question 34 (2.5 points)

This society’s Unemployment Rate is__________

	Type A	Type B	Type C	Type D
Do you currently have a job?	No	Yes	No	No
Are you currently seeking a job?	No	Yes	Yes	No
Number of people of this type	700,000	220,000	80,000	600,000

Question 34 options:

	1) 36.36%
	2) 50%
	3) 26.66%
	4) Cannot be computed from the information provided in the table

Question 35 (2.5 points)

Deflation is

Question 35 options:

	1) a general decrease in the level of overall prices (i.e., a realization of a negative inflation rate)
	2) an extremely high rate of inflation, generally above 100% per year
	3) the rate at which the overall price level increases on an annual basis
	4) None of the above is true

Question 36 (2.5 points)

The equation of exchange is defined as

Question 36 options:

	1) an identity which relates the money supply, velocity of money, overall price level, and aggregate level of output to each other: MV = PQ
	2) the collection of all markets in which lenders and borrowers interact (e.g., mortgage markets, auto loan markets, consumer credit markets, business loan markets).
	3) an increase in the money supply which provides a short term stimulus to the macro-economy, resulting in higher levels of output, employment, and incomes
	4) None of the above statement is true

Answer 1

1.

As per equation of exchange,

MV = PQ

6000.V = 48000

V = 8

Thus, velocity = 8

2.

Cannot be determined

Reason: Labor force numbers not given

3.

A general decrease in the level of overall prices

This is the definition of deflation

4.

An identity that relates the money supply, velocity of money, overall price level and aggregate level of output to each other: MV = PQ

This is the equation of exchange in an economy