The Equation of Exchange Suggests That If the Velocity of Money

question 114

Multiple Choice

The equation of exchange suggests that if the velocity of money and the quantity of goods and services are held constant, a(n)

• A) decrease in the money supply will increase the price level.
• B) increase in the money supply will decrease the price level.
• C) increase in the money supply will increase the price level.
• D) decrease in the money supply will have no effect on the price level.

---

Definitions:

Foreign Source

Originating from a country or place other than one's own; in information or materials context, it refers to sources from outside the domestic or local scope.

Capital

Financial assets or the financial value of assets, such as cash and buildings, used by a business to produce goods or services.

Industrial Development

The process of establishing and growing industries in a region, often leading to economic growth and societal changes.

Trust Organization

An arrangement whereby assets are managed by one party for the benefit of another, often used in business to monopolize industries and markets.