Economics independent/dependent] of the money supply (M)

1.    Instructions: choose the best answer provided in the brackets.
Inflation redistributes income to those who ____________ [can/cannot] raise their prices or wages to those from those who ____________ [can/cannot] raise their prices or wages. Three ways expectations of inflation are formed are rational expectations, adaptive expectations, and extrapolative expectations. Expectations that the economists’ model predicts is called ____________ [rational/adaptive/extrapolative] expectations. Expectations that a trend will continue is __________ [rational/adaptive/extrapolative] expectations. Expectations based in some way on the past is ____________ [rational/adaptive/extrapolative] expectations.
Policymakers use the following equation to determine whether inflation may be coming: Inflation equals the nominal wage increase ____________ [plus/minus] productivity growth.
The quantity theory of money basically states that inflation is ____________ [inversely/directly] related to the rise in the money supply. It is based upon the equation of exchange: MV = PQ. Three assumptions make in the quantity theory of money. First, Velocity (V) is ____________ [is constant/varies]. Second, Real output (Q) is ____________ [independent/dependent] of the money supply (M). Causation goes from ____________ [prices/money] to ____________ [money/prices]. That is, an increase in M causes ____________ [an increase/a decrease] in P. So the price level rises because the money supply rises.

2.    Who wins and who loses from inflation?

3.    With the equation of exchange, answer the following questions:
a. GDP is $2,000, the money supply is 200. What is the velocity of money?