If Nominal GDP Is $954 Billion and Velocity Is 9

question 68

Multiple Choice

If nominal GDP is $954 billion and velocity is 9, then the money supply:

• A)is $106 billion.
• B)is $122 billion.
• C)is $98 billion.
• D)is greater than $8 trillion.
• E)cannot be determined from that information.

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Definitions:

Zero Coupon Bond

A bond that pays no interest during its life. A “zero” sells for the present value of the principal repayment. However, the IRS imputes interest during the bond’s life on which the bondholder must pay tax.

Tax Implications

The potential tax effects or consequences of business transactions, personal income, or investment decisions.

Call Provisions

Clauses in bond contracts that allow the issuer to repay the bond before its maturity date, often at a premium price.

Secured Bonds

Bonds that are backed by collateral, reducing the risk for investors and often resulting in a lower interest rate.