If Real GDP Has Grown at a Rate of 3

question 31

Multiple Choice

If real GDP has grown at a rate of 3%, but nominal money supply and the price level have both grown by 5%, then the income velocity of money must have

• A)stayed constant
• B)decreased by 2%
• C)decreased by 3%
• D)increased by 3%
• E)increased by 8%

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Definitions:

Impeller

The driving member of a torque converter torus; the impeller is mechanically connected to the engine crankshaft and should rotate at the same speed.

Lock-up Clutch

A mechanism used in automatic transmissions that locks the engine directly to the transmission's output, improving fuel efficiency and performance.

Overrunning Clutch

A drive-protection mechanism that prevents a drive member from being driven; for instance, after a starter motor has started the engine, the overrunning clutch prevents the engine from driving the starter and damaging it.