If Initially the Money Supply Is $1 Trillion,velocity Is 5,the

question 39

Multiple Choice

If initially the money supply is $1 trillion,velocity is 5,the price level is 1,and real GDP is $5 trillion,an increase in the money supply to $2 trillion

• A)increases real GDP to $10 trillion.
• B)causes velocity to fall to 2.5.
• C)increases the price level to 2.
• D)increases the price level to 2 and velocity to 10.

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Definitions:

Rapidly Formed

Quickly developed or put together, often with little preparation or forethought.

Representativeness Heuristic

A cognitive shortcut that involves making decisions based on how closely new information resembles existing stereotypes or prototypes.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Algorithms

A step-by-step procedure or formula for solving a problem or accomplishing some objective.