Exam 19: Quantity Theory,inflation and the Demand for Money

Irving Fisher took the view that the institutional features of the economy which affect velocity change ________ over time so that velocity will be fairly ________ in the short run.

If the money supply is $20 trillion and velocity is 2,then nominal GDP is

The classical economists' contention that prices double when the money supply doubles is predicated on the belief that in the short run velocity is ________ and real GDP is ________.

Fisher's quantity theory of money suggests that the demand for money is purely a function of ________,and ________ no effect on the demand for money.

Keynes's theory of the demand for money is consistent with ________ movements in ________.

If people expect nominal interest rates to be lower in the future,the expected return to bonds ________,and the demand for money ________.

Because Keynes assumed that the expected return on money was zero,he argued that people would

The velocity of money is

What factors determine the demand for money in the Baumol-Tobin analysis of transactions demand for money? How does a change in each factor affect the quantity of money demanded?

The demand for money as a cushion against unexpected contingencies is called the

In the Baumol-Tobin model,given that total costs for an individual equals + ,where T₀ = monthly income,b = brokerage costs,and C = amount raised from each bond transaction,derive the so-called square root rule.

Keynes hypothesized that the precautionary component of money demand was primarily determined by the level of

If the money supply is $2 trillion and velocity is 5,then nominal GDP is

Keynes hypothesized that the transactions component of money demand was primarily determined by the level of

If nominal GDP is $8 trillion,and the money supply is $2 trillion,velocity is

The portfolio theories of money demand state that when income (and therefore,wealth)is higher,the demand for the money asset will ________ and the demand for real money balances will be ________.

If initially the money supply is $1 trillion,velocity is 5,the price level is 1,and real GDP is $5 trillion,an increase in the money supply to $2 trillion

If the money supply is $600 and nominal income is $3,600,the velocity of money is

Because interest rates have substantial fluctuations,the ________ theory of the demand for money indicates that velocity has substantial fluctuations as well.

The portfolio theories of money demand state that the demand for real money balances is ________ related to income and ________ related to the nominal interest rate.