If we consider the quantity theory of money and Professor Irving Fisher, who did a lot of his work in the early 20th century, why might Professor Fisher feel less confident about predicting constant velocity of money today than when he did his work?
What will be an ideal response?
No, Professor Fisher would not have been very confident. Financial innovation has both created a variety of assets that serve some of the uses of money and reduced transactions costs associated with converting assets into a means of payment. Together, these have make velocity both grow and become less predictable.
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Which of the following is a permanent member of the Federal Open Market Committee?
A) President of the New York Federal Reserve Bank B) President of the Washington, D.C. Federal Reserve Bank C) Comptroller of the Currency D) Secretary of the Treasury
If the price of pork rinds falls, then the substitution effect due to the price change will cause
A) an increase in the demand for pork rinds. B) an increase in the demand for corn chips, a substitute for pork rinds. C) an increase in the quantity of pork rinds demanded. D) a decrease in the quantity of pork rinds demanded.