Suppose the Money Supply Increases When There Is Much Idle

question 9

Multiple Choice

Suppose the money supply increases when there is much idle capacity in the economy.Which of the following will be the major contributor to the consequent rise in nominal GDP?  

• A) increases in velocity 
• B) increases in real output 
• C) increases in the price level 
• D) increases in the interest rate

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Definitions:

Operating Activities

The day-to-day actions a company takes through its production, sales of goods, or provision of services, as reflected in its cash flow.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor expenses.

Cash Basis

A financial recording approach that logs income and expenditures at the time of actual receipt or payment, rather than when they are earned or owed.

Investing Activities

Transactions and events related to the acquisition and disposal of long-term assets and other investments not considered cash equivalents.