Because Money Serves as a Medium of Exchange, an Increase

question 114

Multiple Choice

Because money serves as a medium of exchange, an increase in real GDP:

• A)increases the buying and selling of goods and services and so increases the demand for money.
• B)increases the buying and selling of goods and services and so decreases the demand for money.
• C)decreases the buying and selling of goods and services and so increases the demand for money.
• D)decreases the buying and selling of goods and services and so decreases the demand for money.

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Definitions:

Loans

A sum of money that is borrowed, which is expected to be paid back with interest.

Bureau of Labor Statistics

A U.S. government agency that collects, processes, and disseminates essential statistical data related to labor market activity, working conditions, and price changes.

Cyclical Unemployment

The deviation of unemployment from its natural rate.

Natural Rate

The rate of any economic activity that is considered to be sustainable in the long term without causing inflation; often used in the context of unemployment.