If V Is Constant and Y Is Fixed, Any Change

question 26

Multiple Choice

If V is constant and Y is fixed, any change in M

• A) leads to a smaller change in P.
• B) leads to a larger change in P.
• C) leads to a proportionate change in P.
• D) does not lead to change in P.

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Definitions:

Long-Run Equilibrium

A state where there is no tendency for economic variables, such as prices, outputs, or employment, to change, because all agents in the economy have fully adjusted to any changes.

Efficient Scale

The level of production at which a firm can produce its goods at the lowest average cost, optimizing resource use.

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit from business operations.

Short-Run Equilibrium

A state in which market supply and demand balance out at a particular price level, resulting in an unchanging economic situation.