Suppose the Velocity of Money Is 6, the Amount of Money

question 126

Multiple Choice

Suppose the velocity of money is 6, the amount of money in circulation is $600 billion, the index of prices is 180, and real GDP is $20 billion. According to the strict quantity theory of money, if the money supply decreased to $300 billion,

• A) the velocity of money would rise to 12.
• B) the index of prices would fall to 90.
• C) real GDP would decrease to $10 billion.
• D) the velocity of money would decline to 3.

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Definitions:

Counseling Relationship

Refers to the professional and therapeutic bond established between counselor and client, which is critical for effective treatment and support.

A-B-C Analysis

A cognitive-behavioral technique that helps individuals understand the relationship between an Antecedent, Behavior, and Consequence.

Irrational Beliefs

These are false or unrealistic beliefs that can lead to maladaptive behaviors and emotions.

Activating Event

An occurrence that triggers a psychological or emotional response, often discussed in cognitive behavioral therapy.