Assuming That Velocity Is Stable, If Real GDP Grows by 10

question 75

Multiple Choice

Assuming that velocity is stable, if real GDP grows by 10 percent this year, and if the money supply does not change this year, how much does the price level change by?

• A) -10 percent
• B) -5 percent
• C) 5 percent
• D) 10 percent

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Definitions:

Presentment Warranties

Guarantees made when presenting negotiable instruments, like checks, assuring the legitimacy and certain qualities of the instrument.

Instrument

A written legal document that officially records a legally enforceable act, process, or contractual obligation, arrangement, or right.

Promissory Note

A legal instrument in which one party promises in writing to pay a determinate sum of money to the other, either at a fixed or determinable future time or on demand of the payee, under specific terms.

Primary Liability

Primary liability pertains to the direct and immediate obligation to fulfil a financial commitment or compensate for a loss.