Consider the Money Demand Function That Takes the Form (M

question 48

Multiple Choice

Consider the money demand function that takes the form (M / P) ^d = Y / (4i) , where M is the quantity of money, P is the price level, Y is real output, and i is the nominal interest rate. What is the average velocity of money in this economy?

• A)i
• B)4
• C)1 / (4i)
• D)0.25

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Definitions:

Fire Triangle

A model explaining the three elements needed for fire to occur: heat, fuel, and an oxidizing agent (usually oxygen).

Temperature

It measures the substance's temperature by evaluating the average kinetic energy of its particles, illustrating if it's hot or cold.

Combustion

A high-temperature exothermic chemical reaction between a fuel and an oxidant, producing heat and usually light in the form of flame.

Chemical Equation

A symbolic representation of a chemical reaction, showing the reactants and products with their respective quantities.