Suppose That the Money Supply Tripled,but at the Same Time

question 20

Multiple Choice

Suppose that the money supply tripled,but at the same time velocity fell by half and real GDP was unchanged.According to the quantity equation the price level

• A)is 1.5 times its old value.
• B)is 3 times its old value.
• C)is 6 times its old value.
• D)is the same as its old value.

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Definitions:

Competitive Firm

A company operating in a market where it competes with other entities for market share and profits by offering the best possible mix of price and quality.

Profit Maximizing

The process or strategy undertaken by businesses to achieve the highest possible profit, often entailing decisions on pricing, production, and cost management.

Loss-Minimizing Level

The production level at which a firm minimizes its losses in the short run when it cannot cover total costs, but can cover variable costs.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.