Suppose That the Nominal Quantity of Money Is $200 Billion

question 515

Multiple Choice

Suppose that the nominal quantity of money is $200 billion and the value of nominal GDP is $1 trillion. It must be the case that

• A) the economy is suffering from inflation.
• B) the average price paid for a "typical" good is $5.
• C) there will be a shortage of money balances in the economy.
• D) the velocity of circulation is 5.

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Definitions:

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The dismissal of prospective benefits from other opportunities by settling on one choice.

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A situation where a country or economy is self-sufficient and does not engage in international trade or relies on imports.