In a period of hyperinflation, the velocity of circulation increases because
A) the real interest rate rises.
B) households and firms spend money as soon as they receive payment.
C) the nominal interest rate decreases.
D) money is valuable everyone wants it.
E) potential GDP increases.
B
Economics
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Suppose you can earn 5 percent on your savings account if you deposit $500 in it. The inflation rate is 3 percent. The opportunity cost of holding the $500 as money is
A) $100. B) $525. C) $80. D) $30. E) $25.
Economics
In the long run, a single-price monopolist will
A) make zero economic profit. B) be able to continue to make an economic profit as long as there is a barrier to entry. C) end up being regulated by the government because it is making short-run economic profits. D) Both answers A and C are correct.
Economics