In the aggregate demand and aggregate supply model, an increase in the growth rate of the velocity of money differs from an increase in money supply growth rate in that:
A. the SRAS curve will eventually shift back to its original position after an increase in money supply growth.
B. the AD curve will eventually shift back to its original position after an increase in velocity growth.
C. the SRAS curve will eventually shift upwards after an increase in velocity growth.
D. the AD curve will eventually shift back to its original position after an increase in money supply growth.
Answer: B. the AD curve will eventually shift back to its original position after an increase in velocity growth.
You might also like to view...
A price floor policy establishes a minimum price for a market, and the policy is said to be binding if the market equilibrium price is less than the floor price. What impact does a binding price floor have on the market outcome?
A) Excess supply B) Excess demand C) Shortage D) No impact, and the market price and quantity equal their equilibrium values
During an expansion, how do inflation and unemployment typically change?
A) Inflation and unemployment both rise. B) Inflation and unemployment both fall. C) Inflation falls and unemployment rises. D) Inflation rises and unemployment falls.