Figure 24-2

question 320

Multiple Choice

Figure 24-2.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.

-Refer to Figure 24-2.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:

POST Sequence

Power-On Self-Test sequence is a diagnostic testing sequence performed by a computer's BIOS to check for hardware problems before loading the operating system.

CPU

Central Processing Unit, the primary component of a computer that executes instructions and processes data.

RAM

Random Access Memory, a form of computer data storage that stores data temporarily to be accessed quickly by the computer's processor.

DMZ (Demilitarized Zone)

A network area that is separate from the corporate network but contains servers that are accessible to outside devices.