The Equation of Exchange Becomes the Same as the Quantity

question 94

Multiple Choice

The equation of exchange becomes the same as the quantity theory of money by assuming that the velocity of circulation when the quantity of money changes and real GDP when the quantity of money changes.

• A)changes; changes
• B)does not change; changes
• C)does not change; does not change
• D)changes; does not change

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.

Margin of Safety

The difference between actual or projected sales and the break-even point; it measures the amount by which sales can drop before reaching the break-even point.

Profit-Volume Chart

A graphical representation that shows the relationship between a firm's profits and its volume of sales.

Cost-Volume-Profit Chart

A graphical representation that shows the relationship between a company's costs, sales volume, and profits.