According to the quantity theory, in the long run, an increase in the growth rate of ________ leads to an increase in the ________
A) real GDP; inflation rate
B) the quantity of money; growth rate of real GDP
C) the quantity of money; inflation rate
D) real GDP; growth rate of velocity
C
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When current government expenditures exceed current tax revenues and the economy is achieving full employment:
A. the cyclically adjusted budget has neither a deficit nor a surplus. B. the cyclically adjusted budget has a deficit. C. fiscal policy is contractionary. D. the cyclically adjusted budget has a surplus.
An increase in the interest rate will
A. increase the demand for money alone. B. change neither the demand nor the supply of money; rather it will only affect the quantity demanded and quantity supplied. C. decrease the demand for money and increase the supply of money. D. increase the demand for money and decrease the supply of money.