Monetarists and classical economists:
a. assume that stimulative monetary policy will create high levels of GDP without inflation.
b. assume that stimulative monetary policy will create high levels of GDP and slightly high prices.
c. assume the economy operates at full employment and stimulative monetary policy will only cause the price level to rise.
d. assume that the economy operates at full employment and stimulative monetary policy will increase both aggregate supply and aggregate demand.
e. assume that the Keynesian description of monetary policy underestimates the true stimulative effect of an increase in the money supply.
c
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The vast majority of all business sales are accounted for by
A) partnerships. B) proprietorships. C) corporations. D) nonprofit organizations.
Suppose money supply (M) = $3,960 billion, price level (P) = 1.1, and real GDP (Y) = $7,200 billion. Calculate the value of velocity using the equation of exchange.
A) 1.6 B) 1.8 C) 2.0 D) 2.2