Suppose the Economy's Velocity Is Constant and Real Output Grows

question 40

Multiple Choice

Suppose the economy's velocity is constant and real output grows at an average rate of 4 percent per year.What would be the result of a 4 percent average rate of growth in the money supply?  

• A) a constant price level 
• B) a constant real GDP 
• C) a rapidly increasing price level 
• D) a slowly increasing price level

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Definitions:

Sleep

A natural, reversible, periodic state of rest for the mind and body, in which consciousness is altered and sensory activity is reduced.

Repair

The physical and biological process by which tissue damage is fixed or restored.

Circadian Rhythm

A natural, internal cycle that dictates the alternation between sleep and wakefulness, repeating roughly on a 24-hour basis.

Suprachiasmatic Nucleus

A small region in the brain's hypothalamus responsible for controlling circadian rhythms, which are the body’s natural sleep and wake cycles.