Figure 34-2

question 110

Multiple Choice

Figure 34-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money;on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.
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-Refer to Figure 34-2.Assume the money market is always in equilibrium,and suppose r₁ = 0.08;r₂ = 0.12;Y₁ = 13,000;Y₂ = 10,000;P₁ = 1.0;and P₂ = 1.2.Which of the following statements is correct?

• A)When r = r₂,nominal output is higher than it is when r = r₁.
• B)When r = r₂,real output is higher than it is when r = r₁.
• C)When r = r₂,the expected rate of inflation is higher than it is when r = r₁.
• D)If the velocity of money is 4 when r = r₂,then the quantity of money is $3,000.

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Definitions:

Enhancement Value

The additional value created through measures that improve the quality, performance, or perception of a product, service, or experience.

Shaping

Positive reinforcement of successive approximations to the desired behaviour.

Positive Reinforcement

A behavior modification technique that involves rewarding a desired behavior to encourage its repetition.

Successive Approximations

A method where complex behaviors are broken down into simpler, achievable tasks that gradually increase in difficulty or complexity.