If Both the Growth Rate and the Velocity of the Money

question 84

Multiple Choice

If both the growth rate and the velocity of the money supply are fixed,then a higher inflation rate will cause:

• A) an upward movement along the AD curve.
• B) a downward movement along the AD curve.
• C) a shift of the AD curve to the left.
• D) a shift of the AD curve to the right.

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Definitions:

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product and are an essential component of the finished product.

Direct Labor

The cost of workers who are directly involved in producing goods or providing services.

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor.

Merchandising

The activities involved in promoting and selling products, often used in retail to refer to the purchase of goods for resale.