Which of the Following Best Describes the Assumption That Monetarists

question 105

Multiple Choice

Which of the following best describes the assumption that monetarists make regarding velocity?

• A)Velocity is fairly predictable in the short run and certainly in the long run.
• B)It is not possible to predict velocity in the short or long run.
• C)Velocity is variable in the long run but predictable in the short run.
• D)Velocity is constant in the long run but variable in the short run.

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Definitions:

Commodity Money

Money that has intrinsic value, such as gold or silver, which can serve as a medium of exchange, a unit of account, and a store of value.

Fractional Reserve Banking

A financial system where just a small portion of the deposits at a bank is supported by real cash present and accessible for withdrawal.

Fiat Money

Fiat money is currency that a government has declared to be legal tender, despite it not being backed by a physical commodity.

Precious Metal

Rare, naturally occurring metallic elements of high economic value, typically used for currency, jewelry, and other arts because of their rarity, durability, and aesthetic qualities.