When Real GDP Increases, People Demand

question 31

Multiple Choice

When real GDP increases, people demand

• A) the same quantity of real money.
• B) less real money.
• C) more real money.
• D) more money in nominal terms but less in real terms.

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Definitions:

Actual Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling, as measured over a specific period of time.

Actual Price Level

The current cost of goods and services in an economy, affecting purchasing power and inflation rates.

Velocity

The rate at which money circulates or is exchanged in an economy, influencing inflation and economic activity.

Money Supply

The total amount of money available in an economy, including cash, deposits, and other forms of liquidity.