If Velocity Is Equal to 4, This Means That

question 232

Multiple Choice

If velocity is equal to 4, this means that

• A)the rate of growth of the money supply is 4.
• B)each dollar of the money supply is spent on the average 4 times per year.
• C)for every 4 dollars of the money supply, nominal GDP will increase by 4.
• D)an increase in the money supply will lead to an increase in aggregate supply of 4.

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Definitions:

Collection Policy

The set of guidelines a company uses to monitor and manage the collection of accounts receivable or owed debts.

Receivables Policy

A set of guidelines a company follows to manage its accounts receivable, including credit terms, collection methods, and credit limits.

Credit-Granting Policy

A set of guidelines that a lender uses to determine whether to extend credit to borrowers and on what terms.

Credit Policy Effects

The impact of a company's credit policy on its cash flows, sales volume, and overall financial health, including aspects like credit terms and collection practices.