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1. Explain why velocity of money systematically tends to increase in periods of robust economic expansion.
2. What is the effect on velocity of money if the following occurs?
a) Banks begin to pay high interest rate on deposits.
b) Great uncertainty is created as the chairperson of the Federal Reserve Board resigns.
3. Assume GDP is currently $14,000 billion per year and the quantity of money is $1,750 billion. What is the velocity of money? The nation collectively holds enough money ti finance how many days worth of GDP expenditure?
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