Cutting the Money Supply by One-Third Is Predicted by the Quantity

question 41

Multiple Choice

Cutting the money supply by one-third is predicted by the quantity theory of money to cause

• A)a sharp decline in real output of one-third in the short run,and a fall in the price level by one-third in the long run.
• B)a decline in real output by one-third.
• C)a decline in output by one-sixth,and a decline in the price level of one-sixth.
• D)a decline in the price level by one-third.

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Definitions:

Wheat

A cereal grain that is a major food staple worldwide, used for making flour, bread, and other products.

Bushels

A unit of volume that is used for measuring quantities of grain or other dry commodities.

Price Range

The difference between the highest and lowest selling price of a good or service in a given market over a certain period of time.

Firm

An organization that comes into being when a person or a group of people decides to produce a good or service to meet a perceived demand.