Question

Let’s focus on the second quarter since the change in velocity is so dramatic. During that quarter, the CPI fell by 0.9%, real GDP fell by 9.0%, the money supply rose by 23%, and velocity changed by %. Give your answer to one decimal. Which of the following can explain such a large change in velocity that occurred during the second quarter?A. People and banks were spending their money at faster rates.B. There was a substantial increase in the money supply.C. People and banks were holding on to their money longer.D. The inflation rate was negative.

Answer 1

Due to the fact that the economy shrank in the second period and GDP decreased by 0.9%, there are some signs that the United States may be approaching a recession.

What is the inflation rate right now?

U.S. Labor Department data released on December 13 show that the annual inflation rate for the United States was 7.1% for the 12 months ending in November 2022 after gaining 7.7% before.

The beneficiaries of inflation?

Collectors. As the value of the dollar decreases during inflationary times, collectibles like fine art, wine, or baseball cards have historically benefited. Investors sometimes turn to hard assets during periods of high inflation because they are more likely to hold their value during periods of market turbulence.

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