If the Dollars Held for Transactions Purposes Are, on the Average

question 209

Multiple Choice

If the dollars held for transactions purposes are, on the average, spent four times a year for final goods and services, then the quantity of money people will wish to hold for transactions purposes is equal to

• A) 4 percent of nominal GDP.
• B) 25 percent of nominal GDP.
• C) nominal GDP multiplied times 4.
• D) nominal GDP divided by 25.

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Definitions:

Consumption

The use of goods and services by households for personal needs or to maintain their standard of living.

Autonomous Consumption

Consumption spending that occurs even when income is zero, representing the basic level of consumption necessary for survival.

Disposable Income

The monetary provision for households post the calculation of income taxes dedicated to saving and spending.

Consumption

The use of goods and services by households, which is a primary component of the economy and influences economic growth.