According to the equation of exchange, if real GDP is $2 trillion and the money supply is $0.5 trillion, the velocity of money:
a. must be 4
b. must be 1/4.
c. must be 4 trillion.
d. must be 1/4 trillion.
e. cannot be determined unless we know the price level.
e
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Suppose that Mighty Mike's Sandwich Shop was started in 1998 and 100 percent of the $250,000 needed to start up the company was raised by selling shares of stock. In 2000, the company distributed its entire profit of $15,000 to shareholders
If the market interest rate is 5 percent, what is the level of economic profit earned by the firm's stockholders?
The Fed's decision to concentrate more on interest rates in conducting near-term monetary policy
A) was the result of deregulation and innovation in financial markets. B) was necessitated by the inability to identify a stable demand for money. C) is sometimes misrepresented by the media as the Fed "setting" interest rates. D) all of the above.