In the Long Run, According to the Quantity Theory of Money

question 53

Multiple Choice

In the long run, according to the quantity theory of money and the classical macroeconomic theory, if velocity is constant, then ______ determines real GDP and ______ determines nominal GDP.

• A) the productive capability of the economy; the money supply
• B) the money supply; the productive capability of the economy
• C) velocity; the money supply
• D) the money supply; velocity

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Definitions:

Deindividuation

A state of reduced individuality, reduced self-awareness, and reduced attention to personal standards; this phenomenon may occur when people are part of a group.

Groupthink

A psychological phenomenon where a group's desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Social Loafing

The tendency for people to work less hard in a group than when working alone.

Group Polarization

The tendency of a group to make decisions that are more extreme than the initial inclination of its members.