Using the Equation of Exchange and Assuming Fixed Price Controls

question 139

Multiple Choice

Using the equation of exchange and assuming fixed price controls and a constant velocity of money,a decrease in the discount rate could temporarily result in

• A)Higher velocity.
• B)Higher quantity of real output.
• C)Higher price level.
• D)Lower money supply.

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Definitions:

Secondary Market

A marketplace where investors buy and sell securities or assets from other investors, rather than from issuing companies.

Minimum Wage Law

Legislation that sets the lowest hourly wage rate that employers can legally pay their workers.

Price

The amount of money expected, required, or given in payment for something. It serves as a signal between buyers and sellers in a market.

Labor

The human effort, both physical and mental, used in the production of goods and services.