Assume Monetary Equilibrium Exists; That Is, the Desired and Actual

question 89

Multiple Choice

Assume monetary equilibrium exists; that is, the desired and actual supply of money are equal. Also assume that nominal GDP equals $960 billion and the money supply is $160 billion. From a strict
Monetarist view, an increase in the money supply by $12 billion will increase nominal GDP by

• A) $13 billion.
• B) $24 billion.
• C) $72 billion.
• D) $80 billion.

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Definitions:

Leisure

Free time when an individual is not engaged in work or essential activities, often used for relaxation, hobbies, or cultural and artistic pursuits.

Income Effect

Refers to the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.

Substitution Effect

The change in demand for a good or service caused by a change in its price, leading consumers to substitute it with other goods or services.

Income Effect

The change in consumer's purchasing power due to a change in real income, affecting the quantity of goods they can buy.