Suppose That Neither Output nor the Money Supply Has Been

question 21

Multiple Choice

Suppose that neither output nor the money supply has been growing. In the new classical view, if the Chairman of the Fed announces a 10% increase in the money supply and then takes actions that cause the money supply to grow by only 5%, the result will be that

• A)the price level will increase, but output will decrease.
• B)output will increase, but the price level will not.
• C)neither output nor the price level will increase.
• D)both the price level and output will increase.

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Definitions:

Accounting System

A systematic process of recording, summarizing, analyzing, and reporting financial transactions of a business to provide an accurate financial picture.

E-Commerce

Refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.

Subsidiary Ledger

A subsidiary ledger is a group of detailed accounts where their totals tie into and support summary amounts in one or more accounts in the general ledger.

General Ledger

A comprehensive collection of a company's accounts and transactions, serving as the foundation of the accounting system.