If the Velocity of Money Is Constant, Then

question 175

Multiple Choice

If the velocity of money is constant, then

• A) a change in nominal GDP can be caused only by a change in the money supply.
• B) a change in the money supply can be caused only by a change in the price level.
• C) a change in the money supply is negatively related to a change in nominal GDP.
• D) a change in the money supply would result in no change in nominal GDP.

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Definitions:

Crop

A plant or plant product that is grown and harvested extensively for profit or subsistence.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a price change of another good.

Complementary Goods

Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).

Positive

Pertaining to statements or analyses that are based on facts and devoid of any value judgments or recommendations.