The Quantity Equation Tells Us That, in the Long Run

question 69

Multiple Choice

The quantity equation tells us that, in the long run, when the economy is at potential GDP, an increase in the growth of the money supply will

• A)always increase inflation by the same amount if velocity is constant.
• B)increase inflation by a smaller amount if velocity increases.
• C)increase inflation by a larger amount if velocity decreases.
• D)always increase inflation.
• E)have no effect on inflation if velocity is constant.

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Definitions:

Hydrological Cycle

The continuous movement of water on, above, and below the surface of the Earth, including processes like evaporation, condensation, and precipitation.

Biogeochemical Cycle

The recycling of inorganic matter between living organisms and their environment, involving processes such as the carbon cycle and nitrogen cycle.

Fossil Fuels

Non-renewable energy sources formed from the remnants of ancient plants and animals, including coal, oil, and natural gas.

Biogeochemical Cycles

Processes that recycle essential elements and compounds between the biological (living) and geochemical (non-living) components of the Earth.