Which of the Following Statements Is True About Velocity

question 30

Multiple Choice

Which of the following statements is true about velocity?

• A) In the short run, velocity varies but in the long run, velocity is relatively constant.
• B) In the short run, velocity is relatively constant but in the long run, velocity varies.
• C) Velocity is relatively constant in the short run and in the long run.
• D) Velocity fluctuates with fluctuations in economic activity and changes in the growth rate of money supply.

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Definitions:

Stabilize Output

Involves government or central bank interventions to minimize fluctuations in a country's economic production or GDP over the business cycle.

Aggregate Demand

The total demand for all goods and services within an economy at various price levels, in a given time period.

Automatic Stabilizer

Economic policies and programs, such as unemployment benefits and taxation, that automatically adjust to counteract economic fluctuations without direct intervention by policymakers.

Crowding-out

A situation where increased public sector spending leads to a reduction in private sector spending.