In a period of hyperinflation, the velocity of circulation ...

[gbarreiro]

In a period of hyperinflation, the velocity of circulation increases because
 
  A) the real interest rate rises.
  B) households and firms spend money as soon as they receive payment.
  C) the nominal interest rate decreases.
  D) money is valuable everyone wants it.
  E) potential GDP increases.

Question 2

Distinguish the current account from the financial account.
 
  What will be an ideal response?

[carojassy25]

Answer to Question 1

B

Answer to Question 2

The current account is the sum of net exports, net income received from investments abroad, and net transfers from abroad. The financial account is the difference between foreign purchases of U.S. assets and U.S. purchases of foreign assets.