Holding the Velocity of Money Constant,according to the Equation of Exchange,a

question 115

Multiple Choice

Holding the velocity of money constant,according to the equation of exchange,a 10 percent increase in the money supply could possibly cause which of the following?

• A)A 5 percent increase in the quantity of output.
• B)A 5 percent decrease in the price level.
• C)A 10 percent decrease in the quantity of output.
• D)A 10 percent increase in the price level.

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Definitions:

Debt Financing

The raising of capital through borrowing money that must be repaid over time, usually with interest.

Business Plan

A precise statement of the rationale for a business and a step-by-step explanation of how it will achieve its goals.