The proposition that in the long run when real GDP equals potential GDP, an increase in the quantity of money leads to an equal percentage increase in the price level is the called the quantity theory of

If the marginal propensity to save (MPS) increases, the multiplier

A) decreases. B) can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC). C) increases. D) stays the same.

In nations that cannot borrow in their own currencies, which exchange rate system is more destabilizing and less useful in terms of stabilizing GDP?

A) floating exchange rates B) fixed exchange rates C) banded exchange rates D) open pegs