Keynes's Model of the Demand for Money Suggests That Velocity

question 38

Multiple Choice

Keynes's model of the demand for money suggests that velocity is

• A)constant.
• B)positively related to interest rates.
• C)negatively related to interest rates.
• D)positively related to bond values.

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Definitions:

Compounded Annually

Interest calculation method where the interest is calculated once per year and added to the principal sum, affecting the calculation of future interest.

Compounded Semi-annually

Interest calculation method where interest is added to the principal twice a year, allowing the interest to grow faster than simple interest.

Savings Plan

A systematic approach to setting aside funds to reach financial goals.

Investments

Funds committed into various financial instruments or assets with the expectation of generating income or profit.