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According to the cash balance approach to the quantity theory of money, what does the price level and value of money depend on?
According to the cash balance approach to the quantity theory of money, what does the price level and value of money depend on?
- Interest rates
- GDP growth
- Demand for money (correct)
- Supply of money
Which economists were associated with the development of the cash balance approach?
Which economists were associated with the development of the cash balance approach?
- Friedman and Schwartz
- Smith and Ricardo
- Malthus and Mill
- Marshall, Pigou, Robertson & Keynes (correct)
What is the transaction motive in the demand for money according to the cash balance approach?
What is the transaction motive in the demand for money according to the cash balance approach?
- Savings for retirement
- Buying real estate
- Day to day transactions (correct)
- Investing in stocks
What is the precautionary motive in the demand for money according to the cash balance approach?
What is the precautionary motive in the demand for money according to the cash balance approach?
Why is the assumption of full employment considered invalid in the context of quantity theory of money?
Why is the assumption of full employment considered invalid in the context of quantity theory of money?
How does Fisher's equation differ from the cash balance approach in explaining the price level?
How does Fisher's equation differ from the cash balance approach in explaining the price level?
What happens to the value of money when the quantity of money becomes double?
What happens to the value of money when the quantity of money becomes double?
Based on the assumptions, which one of the following is NOT true about Fisher's transaction equation?
Based on the assumptions, which one of the following is NOT true about Fisher's transaction equation?
What happens to the value of money when the quantity of money becomes fourfold?
What happens to the value of money when the quantity of money becomes fourfold?
Which of the following is a criticism of Fisher's transaction equation based on the text?
Which of the following is a criticism of Fisher's transaction equation based on the text?
When the quantity of money (M) becomes double, what happens to the average price level (P) according to the text?
When the quantity of money (M) becomes double, what happens to the average price level (P) according to the text?
What is a realistic assumption that Fisher's transaction equation is criticized for not considering?
What is a realistic assumption that Fisher's transaction equation is criticized for not considering?
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