The Value (Purchasing Power) of Each Unit of Money

question 73

Multiple Choice

The value (purchasing power) of each unit of money

• A) is largely independent of the money supply.
• B) tends to increase as the money supply expands.
• C) increases as prices rise.
• D) tends to decline as the money supply expands in relation to the availability of goods and services.

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Definitions:

Return On Assets

An overall measure of profitability; computed by dividing net income by average total assets.

Net Income

The total earnings or profit a company generates, calculated as revenue minus expenses, taxes, and deductions.

Total Assets

The sum of all resources owned by a company that have economic value and can be converted into cash, including property, equipment, and cash itself.

Price-Earnings Ratio

A valuation metric comparing a company's current share price to its per-share earnings, indicating investor expectations of growth.