Author Question: The velocity of money A) is, according to the equation of exchange, equal to M/Y. B) indicates ... (Read 59 times)

chads108 · **on:** Jun 30, 2018

The velocity of money

A) is, according to the equation of exchange, equal to M/Y.
B) indicates the number of times per year a dollar is spent on final goods and services.
C) is, according to the equation of exchange, equal to P/M.
D) indicates the speed with which the U.S. Treasury can mint new coins.

Question 2

Which of the following statements correctly identifies a reason why inflation can be used as a countercyclical policy tool?

A) Inflation sometimes increases the demand for workers that increases output and helps combat slowdowns.
B) Inflation reduces money costs and hence stimulates an economy during slowdowns.
C) Inflation increases consumer demand which is necessary for combating slowdowns.
D) Inflation increases consumer confidence, which is an absolute necessity to counter act business cycles.