If the Central Bank Decides to Keep the Increase in the Money

question 24

Multiple Choice

If the central bank decides to keep the increase in the money supply constant and the velocity of money turns out to be lower than expected,then:

• A)higher unemployment may result.
• B)lower unemployment may result.
• C)inflation will be higher than expected.
• D)inflation will be unaffected, but unemployment will be lower.
• E)both inflation and unemployment will be higher.

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Definitions:

Isocost Lines

Graphical representations in economic theory that showcase all possible combinations of inputs that can be purchased for a given total cost.

Isocost Line

A visual depiction in economics indicating every potential mix of inputs that have an identical overall cost.

Cost Of Capital

The total cost of funds used for financing a business, which may include debt and equity financing costs.

Cost Of Labor

The total amount of financial compensation and benefits paid to employees for their work, including wages, salaries, and benefits.