Suppose Velocity Is Constant at 3,real Output Is 6000,and the Price

question 65

Multiple Choice

Suppose velocity is constant at 3,real output is 6000,and the price level is 20.From this initial situation,the government increases the nominal money supply to $50,000.If velocity and output remain unchanged,by how much will the price level increase?

• A)10%
• B)20%
• C)25%
• D)50%

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Definitions:

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation to each year of the asset's useful life.

Salvage Value

The estimated resale value of an asset at the end of its useful life, used in calculating depreciation.

Depreciation Expense

The allocated amount of an asset’s cost expensed over its useful life to account for the decline in its value over time.

Freight Charges

Fees associated with the transportation of goods from one location to another.