If the Fed makes the quantity of money grow at the same rate as the growth rate of real GDP and velocity does not change, in the long run what happens to the price level and the inflation rate?
What will be an ideal response?
If the quantity of money is growing at the same rate as real GDP and velocity does not change, then the price level does not change. In this case, the inflation rate equals 0 percent.
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Given that the world is filled with uncertainty
A) managers need to assess the probabilities of certain outcomes. B) managers need to avoid using game theory, as it is too complex to be of any help. C) managers need to hire statisticians to calculate expected values. D) none of these choices.
Suppose that the quantity of good y is measured along the vertical axis and that the quantity of good x is measured along the horizontal axis. If the price of good x is $5 and the price of good y is $10 when income is $200 per time period, the slope of the consumer's budget constraint will be
A. -0.5. B. -5. C. -2. D. -10.