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You are watching: When inflation causes relative-price variability,

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Transcribed image text: When inflation causes relative-price variability O consumer decisions are temporarily altered and the ability of markets to efficiently allocate factors of production is impaired O consumer decisions are temporarily altered, but markets are still able to efficiently allocate factors of production O consumer decisions are not altered, but the ability of markets to efficiently allocate factors of production is impaired O consumer decisions are not altered and markets are stillable to efficiently allocate factors of production D Question 40 1 pts The money supply in Tazland is $100 billion. Nominal GDP is $800 billion and real GDP is $200 billion. What are the price level and velocity in Tazland? O The price level and velocity are both 8 O The price level is 8 and velocity is 4 The price level and velocity are both 4 The price level is 4 and velocity is 8 1 pt DI Question 37 Which of the following can a country increase in the long-run by increasing its money growth rate? O Real wages O Real output O Real interest rates O None of these are correct D | Question 38 1 pts The inflation tax O is an alternative to income taxes and government borrowing O taxes most those who hold the most money O is the revenue created when the government prints money all of these answers are correct Question 35 1 pts When deciding how much to save, people care most about O after-tax nominal interest rates O after-tax real interest rates O before-tax real interest rates O before-tax nominal interest rates Question 36 1 pts Hyperinflations occur when the government runs a large budget which the central bank finances with a substantial monetary deficit, contraction D deficit, expansion surplus, contraction surplus, expansion D Question 32 1 pts The classical dichotomy argues that changes in the money supply O affect both nominal and real variables O affect neither nominal nor real variables O affect nominal variables, but not real variables O do not affect nominal variables, but do affect real variables D Question 33 1 pts If P denotes the price of goods and services measured in terms of money then o 1/P represents the value of money measured in terms of goods and services D P can be interpreted as the inflation rate the supply of money influences the value of P, but the demand for money does not all of these answers are correct