In the Short-Run Velocity Is Not Constant

question 2

Multiple Choice

In the short-run velocity is not constant. Which of the following variables can be affected by a change in money supply?
I. real GDP
II. nominal GDP
III. the price level

• A) III only
• B) II and III
• C) I, II, and III
• D) If velocity is not constant, then none of the variables is affected.

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Definitions:

Inelastic Demand Curve

A graphical representation of a situation where a change in price leads to a relatively small change in the quantity demanded.

Marginal Revenue

The change in a firm’s total revenue that results from the production and sale of one additional unit of output.

Cost Conditions

The factors that determine the expenses involved in production, including material, labor, and overhead costs.

Profit-Maximizing

The process or strategy aimed at achieving the highest possible profit from a business operation, by adjusting to optimal production levels and pricing strategies.