Suppose the Velocity of Money Is 6, the Amount of Money

question 126

Multiple Choice

Suppose the velocity of money is 6, the amount of money in circulation is $600 billion, the index of prices is 180, and real GDP is $20 billion. According to the strict quantity theory of money, if the money supply decreased to $300 billion,

• A) the velocity of money would rise to 12.
• B) the index of prices would fall to 90.
• C) real GDP would decrease to $10 billion.
• D) the velocity of money would decline to 3.

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Definitions:

Theory E Change

An organizational change strategy that focuses on creating economic value often at the expense of organizational culture and employee well-being.

Shareholder Value

The concept emphasizing that the ultimate measure of a company's success is the extent to which it enriches its shareholders.

Top-Down Change

Organizational change initiatives that are initiated and guided by the top management or leadership of an organization.

Crisis Management

The process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization or its stakeholders.