Q5 the empirical evidence regarding the velocity of

Q5. The empirical evidence regarding the velocity of
money indicates that velocity tends to be _____; that is, velocity _____ when economic activity
contracts.
A) procyclical; declines
B) countercyclical; declines
C) countercyclical; increases
D) procyclical; increases
Q6. Keynes argued that when interest rates were low relative to some normal value, people would
expect bond prices to _____ so the quantity of money demanded would _____.
Q7. In Friedman ʹ s modern quantity theory, the implied formula for velocity is
Q8. Friedman ʹ s argument that competition among banks will tend to keep the difference between
the return on bonds and money relatively constant implies that changes in _____ will have _____
on the demand for money.
Q9. In the liquidity trap, monetary policy
A) has a large impact on interest rates.
B) has a small impact on interest rates.
C) has no impact on interest rates.
D) has a proportionate impact on interest rates.
Q10. The evidence on the interest sensitivity of the demand for money suggests that the demand
for money is ________ to interest rates, and there is ________ evidence that a liquidity trap
exists.