What Do Most Economists Think Is the Most Accurate Statement

question 73

Multiple Choice

What do most economists think is the most accurate statement about velocity?

• A)Velocity is fairly constant in the short run but varies considerably in the long run, complicating predictions about nominal GDP.
• B)M₁ velocity is more stable in the short run than M₂ velocity, and it has been a superior tool in predicting changes in nominal GDP.
• C)Velocity is not constant in the short run, and predictions about nominal GDP have not fared well.
• D)M₂ velocity has been less stable than M₁ velocity, but both are reliable enough to make accurate predictions about changes in nominal GDP.

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Definitions:

Accounting Equation

A fundamental principle in accounting that states assets equal the sum of liabilities and owner's equity (Assets = Liabilities + Equity).

Net Income

The net income of a business following the subtraction of all costs, such as operating expenses and taxes, from its overall revenue.

Net Loss

The deficit that results when total expenses exceed total revenues in a specific accounting period, indicating a decrease in net assets.

Accounting Equation

A fundamental principle of accounting that states assets are equal to the sum of liabilities and stockholders' equity, expressed as Assets = Liabilities + Stockholders' Equity.