The Output Level of a Country Rises 5% and the Money

question 59

Multiple Choice

The output level of a country rises 5% and the money supply increases 8%. According to the equation of exchange, what can be expected in the long run in this country?

• A) Output will fall by 3%.
• B) Prices will rise by 3%.
• C) Output will rise by 3%.
• D) Prices will fall by 5%.

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Definitions:

Tangible Costs

Explicit expenses or outlays that are easily quantifiable and often involve monetary transactions, such as equipment purchases, rent, and salaries.

Intangible Costs

Expenses or costs that are not easily quantifiable, including things like brand value, intellectual property, or goodwill.

Variable Costs

Costs that change in direct proportion to sales.

Price Elastic

Refers to how sensitive the demand for a product is to changes in its price; high elasticity indicates demand significantly changes with price adjustments.