ZuoTi.Pro
Question

QUESTION 8 Higher rates of inflation would tend to: O a. increase velocity and decrease nominal GDP b. decrease velocity and
business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

b) increase velocity and decrease nominal GDP

Velocity of money is the rate at which money is exchanged in the economy. It is given by total GDP in the economy divided by the money stock in the country. Assuming, money stock to be constant, a higher rate of inflation will increase the nominal GDP, which is essentially P x Q. If prices in the economy go up, the nominal GDP goes up and consequently, the velocity of money also goes up.

0 0
Add a comment
Know the answer?
Add Answer to:
QUESTION 8 Higher rates of inflation would tend to: O a. increase velocity and decrease nominal...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • According to the Fisher effect, an increase in the inflation rate would increase nominal interest ates"...

    According to the Fisher effect, an increase in the inflation rate would increase nominal interest ates" O True O False QUESTION 33 Economists believe that the classical dichotomy separating real from nominal variables holds in the long-run. True False QUESTION 3 Assume the economy only produces basketballs. There is a money supply of $1000. The economy produces 50 basketballs that sell for $40 each. What is nominal GDP and money velocity? "Nominal GDP = $50, velocity = 0.5" "Nominal GDP...

  • Compared with higher inflation rates, a lower inflation rate will (Increase or Decrease?) the after-tax real...

    Compared with higher inflation rates, a lower inflation rate will (Increase or Decrease?) the after-tax real interest rate when the government taxes nominal interest income. This tends to (Encourage or Discourage?) saving, thereby (Increasing or Decreasing) the quantity of investment in the economy and (Increasing or Decreasing) the economy's long-run growth rate. Attempts: Keep the Highest: /2 8. Inflation-induced tax distortions Jacques receives a portion of his income from his holdings of interest-bearing government bonds. The bonds offer a real...

  • 17. A large increase in aggregate demand in an overheated economy will tend to: M Increase...

    17. A large increase in aggregate demand in an overheated economy will tend to: M Increase the real GDP significantly N. Cause an increase in inflation rate O. Reduce the real GDP P. Decrease the nominal GDP

  • Question Suppose an increase in productivity increases nominal GDP by 8% and inflation is -3%. (.e....

    Question Suppose an increase in productivity increases nominal GDP by 8% and inflation is -3%. (.e. deflation). What is the real GDP growth rate? Provide your answer below: FEEDBACK SUBMIT MORE INSTRUCTION " Content attribution NO revious

  • Inflation in-class assignment 1. Explain how an increase in your nominal income and a decrease in...

    Inflation in-class assignment 1. Explain how an increase in your nominal income and a decrease in your Income might occur simultaneously. What effects does inflation have on the purchasing power of the dollar? 2. What is the CPI and how is it determined each month? Show how the BLS calculates the inflation rate from one year to the next. 3. Explain the difference between nominal and real interest rates How are creditors and debtors affected during inflation? Give an example....

  • In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014

    QUESTION 4 In February 2014, South Africa had an inflation interest rates in January and is expected to increase or maintain the interest rates through 2014. The South African central bank is pursuing rate of 5.9 % and an unemployment rate of 24.1%. The South African central bank raised a(n): contractionary monetary policy to contain inflation. expansionary monetary policy to contain inflation. expansionary monetary policy to fight unemployment. contractionary monetary policy to fight unemployment QUESTION 5 When the economy is sluggish, the Fed will: raise interest rates, which...

  • QUESTION 6 The higher a higher, lower O b. lower, lower the nominal interest rate. st...

    QUESTION 6 The higher a higher, lower O b. lower, lower the nominal interest rate. st of processing a loan, the the interest rate charged for the loan; the lawer the expected inflation rate, the O c. lower, higher o d higher, higher QUESTION 7 If you place $10,000 in a savings account that pays 3 percent interest per year and you leave all the money, principal plus interest earned, in the account for three years, approximately how much money...

  • Why willl nominal GDP growth rates typically be higher than real GDP growth rates? a. because...

    Why willl nominal GDP growth rates typically be higher than real GDP growth rates? a. because prices generally decreases b. because GDP generally decreases c. Because prices generally increase d. because GDP generally increases

  • Junly 8. Which of the following statements is correct? A During the 1990s, U.S. Inflation averaged...

    Junly 8. Which of the following statements is correct? A During the 1990s, U.S. Inflation averaged about 2 percent per year. B. A period of hyperinflation is a period of extraordinarily low inflation C A period of deflation is any period during which the inflation rate is decreasing. D. All of the above are correct. E A and B. only 9. Which of the following statements about the classical dichotomy is (are) correct? (X) According to the classical dichotomy, an...

  • QUESTION 8 because there is greater demand for If interest rates rise in the United States...

    QUESTION 8 because there is greater demand for If interest rates rise in the United States relative to the rest of the world, the demand for U.S. dollars will assets with returns. a, increase; higher b. increase; diminishing marginal C. decrease; higher d. decrease; lower e. increase; lower QUESTION 9 exchange rates. Pegged exchange rates can also be referred to as a, variable O b. fixed C. specialized d. flexible e, nominal

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT