In a Period of Hyperinflation, the Velocity of Circulation Increases

question 7

Multiple Choice

In a period of hyperinflation, the velocity of circulation increases because

• A)potential GDP increases.
• B)households and firms spend money as soon as they receive payment.
• C)money is valuable everyone wants it.
• D)the nominal interest rate decreases.
• E)the real interest rate rises.

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Definitions:

Racial Inequality

A disparity in opportunity and treatment experienced by people based on their race, often embedded in systems of education, employment, and justice.

Accumulate Wealth

The process of gathering and increasing assets, resources, or money over time.

Federal Housing Administration

A U.S. government agency created in 1934 to improve housing standards and conditions, provide an adequate home financing system, and to stabilize the mortgage market.

Private Housing Market

The segment of the housing industry where ownership and rental of property is controlled by private individuals and companies, as opposed to public or government entities.