If You Believe That Velocity Is Constant and That the Aggregate

question 55

Multiple Choice

If you believe that velocity is constant and that the aggregate supply curve is vertical, then the quantity theory of money would predict that a doubling of the money supply would cause a doubling of

• A)nominal output and real output.
• B)nominal output and no change in real output.
• C)real output and no change in nominal output.
• D)the price level and real output.

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Definitions:

Fiscal Period

A fiscal period is the time frame used by governments and businesses for accounting purposes and preparing financial statements, typically a year, quarter, or month.

Adjusting Entry

Adjusting entry refers to a journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred, ensuring the accounts reflect these amounts accurately.

Supplies

Materials and items used in the daily operations of a business that often have a short life span.

Salaries Payable

A liability account that represents the amount owed to employees for work done but not yet paid.