Monetarists Say

question 156

Multiple Choice

Monetarists say

• A)that, because P is stable, a change in M will change Q proportionately in the opposite direction.
• B)a change in the money supply will change aggregate demand and therefore the nominal GDP.
• C)a change in the money supply will change velocity, which in turn will change nominal GDP.
• D)a change in the money supply will change the interest rate, which will change investment spending and nominal GDP.

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Definitions:

Production Function

A mathematical representation of the relationship between inputs used in production and the output generated.

Returns to Scale

The rate at which output increases as inputs are proportionally increased in the production process.

Production Function

A Production Function describes the relationship between inputs used in production and the output resulting from their use, showing how output changes as inputs change.

Output Levels

Refers to the quantity of goods or services produced by a company or economy over a certain period.