Suppose That the Nominal Quantity of Money Is $200 Billion

question 509

Multiple Choice

Suppose that the nominal quantity of money is $200 billion and the value of nominal GDP is $1 trillion. It must be the case that

• A) there will be a shortage of money balances in the economy.
• B) the economy is suffering from inflation.
• C) the average price paid for a ʺtypicalʺ good is $5.
• D) the velocity of circulation is 5.

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Definitions:

Full-line Discount

A pricing strategy where a retailer offers discounts on the entire range of products.

GPS

Global Positioning System, a satellite-based navigation system that provides location and time information in all weather conditions, anywhere on or near the Earth.

RFID

Radio Frequency Identification, a technology that uses electromagnetic fields to automatically identify and track tags attached to objects.

Virtual Boundary

An imaginary line in digital space marking the limits of an area or defining a boundary within which certain rules or actions apply.