If the growth rate of the money supply were 4% and the growth rate of the velocity of money were 2%, then which of the following could be a point on the aggregate demand curve?
A. Inflation of 3% and real growth of 3%
B. Inflation of 6% and real growth of 6%
C. Inflation of 4% and real growth of 4%
D. Inflation of 2% and real growth of 2%
Answer: A. Inflation of 3% and real growth of 3%
You might also like to view...
In a fixed exchange rate regime, which of the following policies could lead to a greater trade deficit and leave aggregate demand constant?
A) Devalue the currency. B) Increase government spending. C) Decrease government spending. D) Decrease government spending and devalue the currency. E) Increase government spending and revalue the currency.
In an oligopoly industry, price:
a. will be lower than the competitive price, due to cost savings. b. will exceed the monopoly price, due to the destructiveness of competitive forces. c. cannot be predicted exactly, because it is likely to lie between the competitive and monopoly prices. d. none of these.