In an Economy in Which Velocity Is Constant and Real

question 181

Multiple Choice

In an economy in which velocity is constant and real output grows at an average rate of 3 percent per year, a 5 percent average rate of growth in the money supply would result in a

• A)constant price level
• B)slowly increasing price level
• C)slowly decreasing price level
• D)stable 4 percent growth in real GDP
• E)stable 4 percent growth in nominal GDP

---

Definitions:

Qualitative Characteristics

Attributes that make the information provided in financial statements useful to users, such as relevance and faithfulness.

Faithful Representation

A qualitative characteristic of financial information that ensures the reported data accurately reflects the economic phenomena it purports to represent.

Relevance

The quality of information that is capable of making a difference in the decisions made by the users of financial information.

Verification Costs

Expenses associated with ensuring that a product, service, or system meets specific standards or requirements.