When the Velocity of Circulation Equals 4 in 2010, This

question 472

Multiple Choice

When the velocity of circulation equals 4 in 2010, this fact means that

• A) for each additional dollar of money injected into the economy, the price level rose 4 percent in 2010.
• B) real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved.
• C) on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2010.
• D) consumers held four dollars in wealth for each dollar they spent in 2010.

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Definitions:

Marginal Rate

Often refers to the additional rate of tax that applies to each extra dollar of income or the additional rate of return.

Candy

Sweet confections made from sugar and other ingredients, popular as a treat or snack.

Pareto Optimal

A condition where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off, representing an optimum allocation of resources.

Labor

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