The Assumption That the Velocity of Money and the Quantity

question 93

Multiple Choice

The assumption that the velocity of money and the quantity being produced is constant is held by the:

• A) Keynesian school.
• B) supply-side school.
• C) neo-Keynesian school.
• D) rational expectations school.
• E) classical school.

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Definitions:

Lock Box System

A service offered by banks to process payments received by a company directly into its bank account, speeding up the collection and utilization of funds.

Check Clearing

The process of transferring funds from the check writer's account to the recipient's account, finalizing the payment.

Compensating Balance

A minimum account balance that a borrower is required to maintain as a condition for obtaining a loan, it compensates the bank by offsetting the cost of providing the loan.

Effective Interest Rate

The interest rate on a loan or financial product restated from the nominal interest rate as an interest rate with annual compound interest payable in arrears.