In the Mid-1980s,velocity "Fell Off the Rails," Growing Much Slower

question 91

Multiple Choice

In the mid-1980s,velocity "fell off the rails," growing much slower than its historical trend of 3.4 percent.Had the Fed assumed a constant growth rate of 3.4 percent and maintained a constant growth rate of money supply rather than increasing the growth rate of the money supply as it did,

• A)nominal GDP would have grown more slowly as would real GDP.
• B)nominal and real GDP would have grown more rapidly.
• C)nominal GDP would have grown more rapidly faster and GDP would have grown more slowly.
• D)real GDP would have grown more rapidly faster and nominal GDP would have grown more slowly.

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Definitions:

Stated Dollar Amount

A specific monetary value declared or agreed upon, which is often used in financial contexts for contracts or transactions.

Par Value

The face value of a bond or the stock value stated in the corporate charter, often set at a minimal amount.

Market Value

The current price at which an asset or service can be bought or sold in the market, not necessarily equal to the book value.

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price.