If on Average a Dollar Is Spent Five Times Each

question 71

Multiple Choice

If on average a dollar is spent five times each year to purchase goods and services in the economy, then

• A)the value of velocity must be 0.2.
• B)the value of velocity must be 5.
• C)the value of nominal GDP divided by the money supply must be 0.2.
• D)the value of the money supply divided by nominal GDP must be 5.

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Definitions:

Spending Variance

The difference between the actual amount spent and the amount that was budgeted for a particular period.

Square Feet

A unit of area measurement equal to a square that is one foot on each side, commonly used in real estate and interior planning.

Indirect Materials

Materials used in the support of the production process that are not easily traced to specific products, essential for maintaining production equipment.

Favorable Variance

A financial term indicating that actual costs were less or actual revenues were more than what was budgeted or forecasted.