The Quantity Equation Tells Us That, in the Long Run

question 69

Multiple Choice

The quantity equation tells us that, in the long run, when the economy is at potential GDP, an increase in the growth of the money supply will

• A)always increase inflation by the same amount if velocity is constant.
• B)increase inflation by a smaller amount if velocity increases.
• C)increase inflation by a larger amount if velocity decreases.
• D)always increase inflation.
• E)have no effect on inflation if velocity is constant.

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Definitions:

Primary Drive

Basic, innate drives that motivate behavior necessary for survival, such as hunger, thirst, and the need for warmth.

Stimulus Motives

Drives or urges that are unlearned and lead organisms to pursue stimuli or activities that provide sensory satisfaction.

Self-Actualization

A concept in humanistic psychology referring to the realization or fulfillment of one's talents and potential, considered as a drive or need present in everyone.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, describing a five-tier model of human needs, from basic (physiological) to higher (self-actualization).