The equation of exchange suggests that, if the supply and velocity of money remain unchanged, an increase in the physical volume of goods and services produced will cause:
A. the unemployment rate to rise.
B. the Federal Reserve Banks to sell securities in the open market.
C. a decline in the price level.
D. an automatic budget deficit.
C. a decline in the price level.
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High inflation makes money ________ because ________
A) function better as a store of value; it leads to a more accurate allocation of resources B) function less well as a store of value; the money loses value and therefore has less purchasing power C) function better as a store of value; the money gains value and therefore has greater purchasing power D) function better as a unit of account; money never loses value but it does gain purchasing power in some regions E) function less well as a store of value; it decreases the price level and increases the buying power of money
When the government controls the price of a product, causing the market price to be above the free market equilibrium price,
A) all producers gain. B) both producers and consumers gain. C) only consumers gain. D) some, but not all, sellers can find buyers for their goods.