To achieve a $500 billion decrease in AD, if the MPC is 0.8, what decrease in government purchases would be called for?
a. $100 billion
b. $400 billion
c. $500 billion
d. $625 billion
a
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When the Federal Reserve raises the federal funds rate, the quantity of reserves ________, the quantity of money ________, and the quantity of loans ________
A) increases; increases; increases B) decreases; decreases; decreases C) increases; increases; decreases D) decreases; decreases; does not change E) decreases; does not change; does not change
Which of the following is the dynamic version of the quantity theory of money?
A. Growth in the money supply ? inflation = growth in the velocity of money ? real growth B. Money supply × velocity = price level × real GDP C. Money supply + velocity = inflation + real growth D. Growth in the money supply + growth in the velocity of money = inflation + real growth