Using the Equation of Exchange,the Existence of a Natural Rate

question 16

Multiple Choice

Using the equation of exchange,the existence of a natural rate of unemployment implies that in the long run:

• A)Velocity in the equation of exchange is actually very unstable.
• B)Monetary policy affects only the rate of inflation.
• C)Quantity of real output in the equation of exchange varies in proportion to money supply.

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Definitions:

Weekly Interest Rate

The amount of interest charged or earned over a week, often used to describe the rate for loans or savings accounts on a weekly basis.

Disbursements

Payments made by a business in cash or cash equivalents, often pertaining to operating expenses.

Holding Cash

The practice of keeping a portion of assets in liquid cash form as a safeguard against uncertainty or to meet short-term obligations.