In an Economy in Which Real Output Grows at an Average

question 111

Multiple Choice

In an economy in which real output grows at an average rate of 3 percent per year,a 7 percent average rate of growth in the money supply would result in a(n)

• A)inflation rate of 4 percent,if velocity were constant
• B)inflation rate of -4 percent,if velocity were constant
• C)$4 increase in the price level per year
• D)$4 decrease in the price level per year
• E)change in the velocity of money

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Definitions:

Real Property

Land and anything permanently attached to it, such as buildings and improvements.

A Car

A motor vehicle designed primarily for passenger transportation.

A House

A building for human habitation, typically consisting of multiple rooms and other spaces.

Trespasser

An individual who enters someone's property without permission or legal right.