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:

Recorded By Debits

Transactions in accounting that increase assets or expenses and decrease liabilities, equity, and revenue, captured on the left side of an account.

Decreases

A reduction in the quantity, level, or intensity of something, such as expenses, assets, or liabilities.

Prepaid Insurance

An asset account that represents insurance payments made in advance for coverage extending beyond the current accounting period.

Accounts Payable

Amounts owed by a business to its suppliers shown as a liability on a company’s balance sheet and typically due within a short period of time, often 30 to 90 days.