Question

Q1, and 4. Please explain in detail about the answer, please use a graph, explain and interpret the graph if needed. Thank you

1. If the velocity of money were to increase but the money supply stayed the same, we definitely would see a. a decrease in nominal GDP. rightward shift in Aggregate Supply. b. a c. a decrease in real GDP d. a rightward shift in Aggregate Demand. e. deflation. 2. If a country increases its money supply by 2%, and its nominal GDP increases by 1%, what can you say about what happened to the velocity of money in this country? a. It did not change. b. It decreased. c. It increased by 12%. d. We cannot tell which way it changed. e. It increased. 3. According to the Classical Quantity Theory of Money (with fixed velocity, V , and fixed output level, Q in the short run), a. an x% increase in the money supply, M°, will cause a greater-than-x% increase in the aggregate price level, P. b. an x% increase in M° will cause an x% increase in P. c. an x% increase in M° will cause a smaller-than-x% increase in P. d. an x% increase in the money supply, M°, will not change P. e. none of the above. 4. Consider our discussion of exchange rate determination. If we had an exogenous decrease in US investment in GB (Great Britain), we would expect a. an appreciation of the dollar ($) against the GB pound, £. b. an increase in the demand (rightward shift) for £ from the currency market. c. an appreciation of the £ against the $ d. a decrease in the supply (leftward shift) of the £ to the currency market. depreciation of the $ against the £. e. a 5. Suppose the British pound (£) appreciates against the US dollar. Other factors held constant, this would mean that a. US consumers would find British goods to be more expensive. b. British consumers would find US goods to be more expensive. c. the US $ has also appreciated against the £. d. it would take fewer $ than before to buy £1. e. none of the above.

Answer 1

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