The Quantity Theory of Money Concludes That If Real Output

question 77

Multiple Choice

The quantity theory of money concludes that if real output is constant:

• A)changes in the price level are caused by changes in the money supply.
• B)real GDP and the money supply are related in the long run.
• C)changes in velocity are proportional to changes in nominal income.
• D)changes in velocity are proportional to changes in the money supply.

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Definitions:

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period, transferring the net amount to retained earnings.

Sales Returns

Transactions where customers return defective, unsatisfactory or unwanted products back to the seller, resulting in a reversal of revenue.

Accounts Receivable

Financial obligations of customers towards a business for delivered but unpaid goods or services.

Operating Cycle

The duration of time it takes for a company to buy inventory, sell it to customers, and collect the cash from sales.