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51. A contraction in the money supply would most likely:
lead to an increase in nominal interest rates.
lead to a decrease in nominal interest rates.
increase the equilibrium amount of money that economic agents would wish to hold.
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52. As the gross domestic product (GDP) grows over time:
transactions money balances increase and precautionary money balances decrease.
transactions money balances decrease and precautionary money balances increase.
both transactions and precautionary money balance increase.
53. Which of the following is most likely correct about the quantity equation of exchange?
The velocity of money is assumed to be approximately constant.
The spending, P * V, is approximately proportional to quantity of money, M.
If money neutrality holds, an increase in the money supply, M, affects Y, real output.
54. Due to high inflation, businesses constantly have to change the advertised prices of their goods and services. This is best described as:
menu costs.
shoe leather costs.
inflation uncertainty
55. Unexpected inflation least likely:
leads to inequitable transfers of wealth between borrowers and lenders.
gives rise to risk premia in borrowing rates and the prices of other assets.
increases the information content of market prices.
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