According to the Equation of Exchange, If Velocity and Real

question 16

Multiple Choice

According to the equation of exchange, if velocity and real GDP do not change, a 3 percent increase in the quantity of money

• A) raises the price level by 3 percent.
• B) raises the price level by 3 ÷ (velocity).
• C) lowers the price level by 3 ÷ (real GDP).
• D) lowers the price level by 3 percent.
• E) raises the price level by less than 3 percent.

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Definitions:

Disruptions

Events or activities that cause a disturbance or interruption in normal operations or supply chain activities.

Susceptibility

The likelihood or predisposition to be influenced or harmed by a particular factor or condition.

Transportation Cost

Expenses associated with the movement of goods or materials from one location to another, including fuel, labor, and maintenance expenses.

Economic Deregulation

Reduction of government power over certain industries, aimed at improving market efficiencies and fostering competition.