In an Economy in Which Real Output Grows at an Average

question 124

Multiple Choice

In an economy in which real output grows at an average rate of 3 percent per year, a 7 percent average rate of growth in the money supply would result in a(n) _____

• A) inflation rate of 4 percent, if the velocity of money in circulation is constant.
• B) inflation rate of -4 percent, if the velocity of money in circulation is constant.
• C) $7 increase in the price level each year.
• D) $7 decrease in the price level each year.
• E) increase in the velocity of money in circulation.

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Definitions:

Opportunity For Growth

The potential for personal, professional, or business expansion and development, often leading to increased skills, knowledge, or profits.

Achievement

Accomplishing a goal or reaching a target after effort, skill, or courage has been applied.

Vroom's Expectancy Theory

A theory of motivation that suggests an individual's behavior is determined by their expected results or outcomes of actions.

Likelihood

The chance or probability of a specific event occurring within a given context or set of circumstances.