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:

Market Price

The current price at which a good or service can be bought or sold in a market.

Total Cost

The sum of all costs, fixed and variable, associated with the production and sale of a good or service.

Perfectly Competitive

A market structure where there are many buyers and sellers, all selling identical products, with no barriers to entry or exit.

Market Price

The current exchange rate for an asset or service on the market.