Figure 34-2

question 110

Multiple Choice

Figure 34-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.
.
-Refer to Figure 34-2.Assume the money market is always in equilibrium,and suppose r₁ = 0.08;r₂ = 0.12;Y₁ = 13,000;Y₂ = 10,000;P₁ = 1.0;and P₂ = 1.2.Which of the following statements is correct?

• A)When r = r₂,nominal output is higher than it is when r = r₁.
• B)When r = r₂,real output is higher than it is when r = r₁.
• C)When r = r₂,the expected rate of inflation is higher than it is when r = r₁.
• D)If the velocity of money is 4 when r = r₂,then the quantity of money is $3,000.

---

Definitions:

Seizures

Unregulated electrical disruptions within the brain leading to alterations in behavior, motor functions, emotions, and awareness levels.

Visual Deficit

Impairment in the ability to see normally, which can affect one or both eyes.

Blinking Lights

Flashing or flickering lights, often used as indicators, warnings, or for decorative purposes.

Gas Appliances

Devices powered by natural gas or propane, used for heating, cooking, or water heating in residential or commercial settings.