If You Believe That Velocity Is Constant and That the Aggregate

question 126

Multiple Choice

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

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

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Definitions:

Commercial Interests

Describes the business pursuits and ventures that aim at generating profit, particularly those involving trade and commerce.

China

A country in East Asia, the world's most populous nation, with a long history, rich culture, and significant global economic and political influence.

1899

A year noted for marking the end of the Spanish-American War with the signing of the Treaty of Paris, leading to Spain ceding control of its colonies.