Mainstream Economists Contend That a Policy Rule Based on the Equation

question 230

Multiple Choice

Mainstream economists contend that a policy rule based on the equation of exchange breaks down because

• A) there is a tight relationship between the money supply and nominal GDP.
• B) velocity is more variable and unpredictable than expected.
• C) the money supply increases at a constant, not a variable, rate.
• D) nominal GDP is directly related to changes in the price level.

Comprehend the computation and significance of earning per share (EPS) and price-earnings (P/E) ratios.

Identify the calculation and implications of dividend yield.

Understand the differences between book value and market value.

Recognize the financial statement classification of dividends and treasury shares.

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