Suppose Velocity Is Constant, but Real GDP Is Not Independent

question 167

Multiple Choice

Suppose velocity is constant, but real GDP is not independent of the money supply. If this is the case, a 10 percent increase in the money supply will:

• A)raise inflation by 10 percent.
• B)raise inflation by less than 10 percent.
• C)raise inflation by more than 10 percent.
• D)have an unpredictable effect on inflation.

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Definitions:

Urban Land

Areas of land characterized by higher population density and vast human features in comparison to areas surrounding it, often dedicated to commercial, residential, and infrastructure use.

Fixed

Something that is constant or unchangeable over a certain period of time, such as a fixed interest rate.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activity.

Risk-Bearing

The assumption of the risk and uncertainty involved in an enterprise or investment.