Which of the Following Predictions Can Be Made Using the Growth

question 44

Multiple Choice

Which of the following predictions can be made using the growth rates associated with the equation of exchange, given that velocity is stable and that the economy moves to its potential output (Y_P) in the long run?

• A)If the growth rate in Y_P exceeds the money growth rate, there will be inflation.
• B)If the money growth rate exceeds the growth rate in Y_P, there will be deflation.
• C)If the money supply grows at the same rate as growth in Y_P, the price level will grow at a constant rate.
• D)If the money supply grows at the same rate as growth in Y_P, the price level will also increase at the same rate as growth in Y_P.

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Definitions:

Brachiocephalic Artery

A major blood vessel of the arterial system that supplies blood to the right arm and head, branching from the aorta.

Coronary Artery

One of two arteries that arise from the base of the aorta and carry blood to the muscle of the heart.

Abdominal Aorta

The portion of the aorta that passes through the abdomen, supplying oxygenated blood to the abdominal and pelvic organs and the legs.

Common Iliac

Refers to the large artery that divides into the internal and external iliac arteries, supplying blood to the pelvic region and legs.