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##### The quantity theory of money relates money, prices, velocity, and output.

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Question

8. The quantity theory of money relates money, prices, velocity, and output. According to the quantity theory of money;A. real output and velocity increase with the money supply;B. an increase in the money stock will decrease prices;C. an increase in the money stock will decrease GDP;D. real output and velocity are independent of the money supply;=============================;9. If money supply is rising and velocity is falling;A. the impact on inflation and real GDP is uncertain;B. inflation will rise;C. inflation will fall;D. real GDP will rise;===============================;10. Suppose the Federal Reserve purchases \$10 million in Treasury bills from the public (a so-called open market purchase) during a period when there were no excess reserves in the banking system. The reserve requirement is 20%. The money supply has the potential to;A. increase by \$10 million;B. fall by \$50 million;C. increase by \$50 million;D. fall by \$20 million

Paper#27896 | Written in 18-Jul-2015

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