Which of the Following Developments Will Most Likely Lead to an Increase

question 142

Multiple Choice

Which of the following developments will most likely lead to an increase in the velocity of money?

• A) a decrease in the expected inflation rate
• B) an increase in money interest rates
• C) a sharp decline in using credit cards
• D) a decrease in real income

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Definitions:

Real Rate Of Return

The yearly percent yield earned from an investment, after accounting for variations in price caused by inflation or various external influences.

Inflation Rate

The escalation in overall prices for goods and services, leading to a drop in how much can be bought.

Annual

Relating to or denoting a period of one year.

Nominal Rate

The stated interest rate of a financial product, not adjusted for inflation, representing the face value of interest payments.