If an Economy Produces 4,000 Units of Output with a Price

question 148

Multiple Choice

If an economy produces 4,000 units of output with a price level of $2 and with a velocity of money of 8, we know that the money supply must be:

• A) $1,000.
• B) $8,000.
• C) $2,000.
• D) $4,000.

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Definitions:

Temporal Discounting

In decision making, the greater weight given to the present over the future.

Certainty Effect

A cognitive bias where people give greater weight to outcomes that are certain, compared to outcomes that are only probable.

Reactance

An inspired response to propositions, individuals, guidelines, or policies that challenge or remove certain freedoms of behavior.

Risk Aversion

In decision making, the greater weight given to possible losses than possible gains.