If real GDP grows at 4 percent, the quantity of money grows at 6 percent, and velocity does not change, then in the long run the inflation rate is
A) 2 percent. B) 4 percent. C) 10 percent. D) 1.5 percent. E) 6 percent.
A
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An expansionary fiscal policy is likely to
A) decrease a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds. B) increase a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds. C) increase a government budget surplus (or increase a budget deficit) and increase borrowing by the Treasury which will sell more bonds. D) decrease a government budget surplus (or increase a budget deficit) and decrease borrowing by the Treasury which will buy more bonds.
Stagflation occurs when aggregate supply and aggregate demand both increase
Indicate whether the statement is true or false