According to the Quantity Equation, When Velocity Is Stable, Which

question 86

Multiple Choice

According to the quantity equation, when velocity is stable, which of the following best describes the effects of an increase in the money supply?

• A) An increase in the money supply causes a proportional increase in nominal GDP but not in the price level.
• B) An increase in the money supply causes a proportional increase in the price level and real GDP.
• C) An increase in the money supply causes a proportional increase in the real GDP but not in the price level.
• D) An increase in the money supply causes a proportional increase in the price level and nominal GDP.

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Definitions:

Dance Party

A social gathering where individuals come together to dance, enjoy music, and often, celebrate an occasion or simply for enjoyment.

Bystander Intervention Effect

The phenomenon where the presence of others can influence an individual's likelihood to help a person in distress, often reducing the likelihood of intervention.

Risky-Shift

Refers to the phenomenon where groups tend to make riskier decisions together than individuals would on their own.

Group Polarization

The inclination of a collective to reach decisions that are significantly more radical than the initial tendencies of the individual members.