If the Money Supply Is 500 and Velocity Is 6

question 150

Multiple Choice

If the money supply is 500 and velocity is 6, then nominal GDP:

• A)is 83.33.
• B)is 500.
• C)is 3,000.
• D)cannot be determined.

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Definitions:

Real Wages

Wage increases larger than rises in the consumer price index; that is, the real earning power of wages

Expectancy Theory

A motivation theory suggesting that individuals are more likely to act in a certain way based on the expectation that the act will be followed by a given outcome and the attractiveness of that outcome.

Pay Systems

Structures within an organization that determine how employees are compensated for their work, including wages, salaries, benefits, and incentives.

Escalator Clauses

Clauses in collective agreements that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the consumer price index.