Refer to the Above Diagram for the Market for Money

question 55

Multiple Choice

Refer to the above diagram for the market for money.If each dollar held for transactions purposes is spent four times per year on the average, we can infer that the:

• A)real GDP is $800.
• B)nominal GDP is $800.
• C)money supply must be $800.
• D)nominal GDP is $1,200.

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Definitions:

Terms of Trade

The ratio at which a country's exports exchange for its imports, affecting the economy's health.

Heckscher-Ohlin Theorem

An economic theory stating that countries export what they can most efficiently and plentifully produce, based on their factor endowments of labor, land, and capital.

Trade Flows

The movement of goods and services between countries or regions, highlighting the patterns and volumes of trade.

Factor Endowments

The quantity and quality of labor, land, and capital that a country possesses, which can affect its comparative advantage in trade.