According to the Quantity Theory of Money, Velocity

question 165

Multiple Choice

According to the quantity theory of money, velocity:

• A)varies substantially with changes in the rate of interest and the expected rate of inflation.
• B)varies with changes in the growth rate of the money supply.
• C)is fairly constant, responding only to changes in the expected rate of inflation.
• D)is virtually constant, responding only to changes in the underlying institutional structure.

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Definitions:

Marginal Utility

The boost in satisfaction or usefulness one gets from consuming an extra unit of any good or service.

Total Utility

The total satisfaction or benefit that a consumer derives from consuming a certain quantity of goods or services.

Marginal Utility

The increase in satisfaction or value derived from the consumption of one more unit of a good or service.

Utility Schedule

A table showing the relationship between quantities of goods consumed and the utility or satisfaction derived from those quantities.