Assuming a Long-Run Relationship, If Nominal Money Supply Grows at a Rate

question 50

Multiple Choice

Assuming a long-run relationship, if nominal money supply grows at a rate of 5%, real output growth is 3%, and the inflation rate is 2%, what is the percentage change in velocity?

• A)5%
• B)2%
• C)1%
• D)0%
• E)-1%

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Definitions:

Units Produced

denotes the total quantity of completed goods made during a specific period.

Opening Inventory

The inventory that a business has on hand at the start of an accounting period, consisting of products and materials.

Production Budget

An estimate of the total cost of production, including detailed allocations for raw materials, labor, and overhead expenses.

Units

A measure of quantity, such as items produced or services rendered, used in various business contexts.