Suppose You Earn $4,800 a Month and Spend Exactly $160

question 53

Multiple Choice

Suppose you earn $4,800 a month and spend exactly $160 in each of the 30 days. If your entire earnings are deposited in your checking account at the beginning of the month, then your average quantity of money demanded is

• A) $160.
• B) $1,200.
• C) $2,400.
• D) $4,800.

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Definitions:

Base Year

A reference year against which economic growth, prices, or quantities are measured in index numbers or other economic data series.

Real Wages

Wages adjusted for inflation, reflecting the purchasing power of income and the true cost of living for workers.

Productivity

The efficiency of production of goods or services expressed as the ratio of output to inputs used, a key determinant of economic performance.

Directly Proportional

A relationship between two variables where an increase in one results in a proportional increase in the other.