The Quantity Theory of Money Predicts That,in the Long Run,inflation

question 111

Multiple Choice

The quantity theory of money predicts that,in the long run,inflation results from the

• A)velocity of money growing at a faster rate than real GDP.
• B)velocity of money growing at a lower rate than real GDP.
• C)money supply growing at a lower rate than real GDP.
• D)money supply growing at a faster rate than real GDP.

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Definitions:

Plant Capacity

The maximum output that a manufacturing facility can produce under normal working conditions.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which allocates an equal amount of depreciation each year over the asset's useful life.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Salvage Value

Projected value of an asset for resale once it has concluded its period of effective use.