The Equation of Exchange Suggests That, If the Supply and Velocity

question 275

Multiple Choice

The equation of exchange suggests that, if the supply and velocity of money remain unchanged, an increase in the physical volume of goods and services produced will cause

• A) the unemployment rate to rise.
• B) the Federal Reserve Banks to sell securities in the open market.
• C) a decline in the price level.
• D) an automatic budget deficit.

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Psychological Theory

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