Suppose There Is an Increase in the Money Supply, with Velocity

question 21

Multiple Choice

Suppose there is an increase in the money supply, with velocity and real GDP constant.According to the equation of exchange, which of the following variables will likely increase?  

• A) net exports 
• B) the price level 
• C) interest rates 
• D) the value of Canadian dollar

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Definitions:

Enabling Legislation

Laws that provide the necessary authority for an entity or agency to carry out its powers and duties.

Discretionary Powers

The authority granted to an official or a body to act according to their own judgment and conscience in certain situations.

Informal Powers

Powers not explicitly stated in laws or regulations but exercised by individuals or institutions through influence, negotiation, or personal authority.

Regulated Industries

Sectors under the direct control and rules of governmental agencies to ensure safety, fairness, and compliance.