In the Late 1970s and Early 1980s, the Velocity of Money

question 27

Multiple Choice

In the late 1970s and early 1980s, the velocity of money increased significantly. The main reason(s) for the increase was:

• A) as presidential election years near the velocity of money increases.
• B) the introduction of stock and bond mutual funds with draft writing privileges and low nominal interest rates.
• C) high nominal interest rates.
• D) the introduction of stock and bond mutual funds with draft writing privileges along with high nominal interest rates.

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Definitions:

Face Value

The nominal or dollar value printed on a bond or stock, representing the amount due at maturity for a bond or the value assigned to a stock share at issue.

Effective Interest Rate Method

The effective interest rate method is a technique for calculating the actual interest rate for a loan or financial product over time, considering the effects of compounding.

Interest Expense

The cost incurred by an entity for borrowed funds, often reflected in the payment of interest on loans or debt.

Carrying Value

The value of an asset as shown on a company's balance sheet, accounting for depreciation, amortization, and impairment, also known as the book value.