Figure 34-2

question 298

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.

-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:

T-tubule

Tubular extensions of the cell membrane in muscle cells, which play a critical role in the conduction of electrical signals for muscle contraction.

Action Potential

A short-lasting event in which the electrical membrane potential of a cell rapidly rises and falls, allowing nerve cells to communicate.

Contractile Organelle

A cell component that is involved in the contraction and movement processes, such as muscle fibers.

Electromyogram

A diagnostic procedure to assess the health of muscles and the nerve cells that control them by recording the electrical activity produced by skeletal muscles.