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Questions and Answers

(1071 solutions)

An inflation tax is _______.

b. a tax on everyone who holds money...

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Countries that employ an inflation tax do so because _______.

a. government expenditures are high and the government has inadequate tax collections and difficulty borrowing...

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Velocity is _______.


b. the speed at which the typical dollar circulates...

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If the money supply grows 7 percent and real output grows 3 percent, prices should rise by _______.

b. less than 7 percent...

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If money is neutral, _______.


c. a change in the money supply only affects nominal variables such as prices and dollar wages...

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The quantity equation states that _______.

c. money × velocity = price level × real output...

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An example of a real variable is _______.


b. the ratio of the price of eggs to the price of milk...

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The quantity theory of money concludes that an increase in the money supply causes a _______.


d. proportional increase in prices...

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In the long run, the demand for money is most dependent upon _______.

b. the level of prices...

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If the price level doubles, _______.

d. the value of money has been reduced by half...

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