According to the Quantity Theory of Money, When Velocity Is

question 64

Multiple Choice

According to the quantity theory of money, when velocity is constant, if output is higher, _____ real balances are required, and for fixed M this means _____ P.

• A)higher; lower
• B)lower; higher
• C)higher; higher
• D)lower; lower

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Definitions:

Deficit

The amount by which government spending exceeds its revenue over a specified period, leading to borrowing or budget shortfalls.

Unilateral Transfer

A one-way transaction where a country provides resources, goods, or money to another country without expecting anything in return.

Foreign Aid

An international transfer made on especially favorable terms for the purpose of promoting economic development.

Domestic Charities

Organizations within a country that are established for philanthropic reasons, focusing on local or national issues and causes.