If the Fed’s monetary policy causes a substantial increase in interest rates, what is the most likely impact on velocity?

A. Velocity will decrease.
B. Velocity will increase.
C. Velocity will remain constant.
D. Velocity is unrelated to interest rates.

Answer: B

Economics

If there is a recessionary gap, the appropriate fiscal policy would be contractionary.

a. true b. false

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Economics

Why do many economists believe that money affects output? What is the empirical evidence in support of that belief?

What will be an ideal response?

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Economics