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:

Factory Payroll

Refers to the total amount of wages and salaries paid to employees working in a manufacturing or production facility.

Direct Labor

The wages of employees who are directly involved in the production of goods or services.

Manufacturing Overhead-Control

An account used to record the indirect costs associated with the production process, including expenses such as utilities and rent.

Raw Materials Used

The total cost or amount of basic materials consumed in the production process.