Suppose the Public Holds $200 Billion in M2 and the Velocity

question 53

Multiple Choice

Suppose the public holds $200 billion in M2 and the velocity of the M2 money supply is 5. What is the value of nominal GDP?

• A) $500.
• B) $1,000.
• C) $1,500.
• D) That information cannot be determined.

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Definitions:

Fundamental Attribution Error

The tendency to overemphasize personal characteristics and underestimate situational factors when explaining other people's behavior.

Prejudice

Preconceived opinion or judgment about someone or something that is not based on reason or actual experience.

External Attributions

The process of attributing the cause of behavior to situational factors outside a person.

Lowball Technique

A persuasive tactic in which an initially favorable offer is made, but then terms are changed to be less favorable once initial commitment is achieved.