If an Economy Produces 2,000 Units of Output When the Price

question 130

Multiple Choice

If an economy produces 2,000 units of output when the price level is $1 and the money supply is $1,000, what is the velocity of money?

• A) 2
• B) 500
• C) 50
• D) 5

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Definitions:

Law of Demand

An economic principle stating that as the price of a good increases, the demand for that good decreases, and vice versa.

Steak

A cut of meat, typically beef, that is sliced perpendicular to the muscle fibers, often grilled or pan-fried.

Rhode Island

The smallest U.S. state by area, located in the New England region.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite of normal goods.