Consider the Equation $\Delta$ M $\Delta$ V $\approx$ $\Delta$ P +

question 158

Multiple Choice

Consider the equation % $\Delta$ M +% $\Delta$ V $\approx$ % $\Delta$ P + % $\Delta$ Y.If the velocity of money does not change (% $\Delta$ V= 0) ,and the change in real GDP exactly keeps pace with the change in the money supply (% $\Delta$ M = % $\Delta$ Y) ,what will happen to the price level (P) ?

• A) It will go up,%\(\Delta\)P\(\gt\)0.
• B) It will go down,%\(\Delta\)P \(\lt\) 0.
• C) It will stay the same,%\(\Delta\)P = 0.
• D) It will equal the sum %\(\Delta\)M+%\(\Delta\)Y.
• E) It will drop out of the equation.

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Definitions:

Relevant Range

The range of activity or volume over which specific cost behavior assumptions are valid.

Measurement Device

An instrument or tool used to obtain quantitative data by measuring a physical quantity.

Expected Value

The expected value is a statistical concept representing the average of all possible outcomes of a random variable, weighted by their probabilities.

Random Variable

A variable that can take on numerical results as outcomes of a random event.