Question

According to the quantity equation, if velocity is stable, an increase in the money supply of three percent and an increase in real GDP of four percent causes the price level to rise by one percent.

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false

Money demand refers to how much wealth people want to hold in liquid form and money demand depends on both the price level and the interest rate

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false

Bertha gives her employees a $1 increase in their hourly wage. However, the employees figure that, even with the increase, their wage buys fewer goods than a year ago. It follows that the workers' nominal wage rose and their real wage fell.

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false

The Fisher Effect says that the real interest rate adjusts one for one with the inflation rate in order to keep the nominal interest rate constant.

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false

As the price level decreases, people may be more willing to hold money as a store of value since the value of money is rising

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false

Answer 1

a) False, it should be MV=PY is the price has incresed by 1 then the equation doesn't satisfy.

b) True, the interest rate and the price level both determines the money demand in the market.

c) True, as the purchasing capacity of the money has reduced the real value of the goods have fallen.

d) True, as per the fisher effect the real interest rate = nominla rate - inflaiton

e) False,they will hold less money as money demand also decrease with price level.