According to the Quantity Equation, If P = 3 and Y

question 33

Multiple Choice

According to the quantity equation, if P = 3 and Y = 400, which of the following pairs could M and V be?

• A) 100, 3
• B) 200, 2
• C) 300, 5
• D) 600, 2

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Definitions:

Potential Output

The highest level of GDP a country can achieve when its resources are fully employed, without causing inflation.

Labor Productivity

A measure of economic performance that compares the amount of goods and services produced (output) with the number of labor hours used to produce those goods and services.

Supply of Labor

Refers to the total hours that workers wish to work at a given wage rate, influenced by demographics, wages, and working conditions.

Aggregate Demand

The sum of all demand for products and services in an economy, indicating the total spending on goods and services at each price level.