If velocity is equal to 4, this means that A) the rate of ...

[tuffie]

If velocity is equal to 4, this means that
 
  A) the rate of growth of the money supply is 4.
  B) an increase in the money supply will lead to an increase in aggregate supply of 4.
  C) each dollar of the money supply is spent on the average 4 times per year.
  D) for every 4 dollars of the money supply, nominal GDP will increase by 4.

Question 2

According to the theory based on rational expectations and flexible wages and prices,
 
  A) only the combination of discretionary fiscal policy and conservative monetary policy can affect real GDP in the long run.
  B) neither fiscal nor monetary policy influence real GDP in the long run.
  C) fiscal policy has less effect on real GDP than monetary policy in the long run.
  D) monetary policy has less effect on real GDP than fiscal policy in the long run.

[jordangronback]

Answer to Question 1

C

Answer to Question 2

B