According to the Quantity Equation, When Velocity Is Stable, Which

question 86

Multiple Choice

According to the quantity equation, when velocity is stable, which of the following best describes the effects of an increase in the money supply?

• A) An increase in the money supply causes a proportional increase in nominal GDP but not in the price level.
• B) An increase in the money supply causes a proportional increase in the price level and real GDP.
• C) An increase in the money supply causes a proportional increase in the real GDP but not in the price level.
• D) An increase in the money supply causes a proportional increase in the price level and nominal GDP.

---

Definitions:

Production Jobs

Tasks or operations related to the manufacturing or production process within an organization, often categorized by specific roles or assignments.

Profit

The financial gain realized when the amount of revenue gained exceeds the expenses, costs, and taxes needed to sustain the operation.

Factory Overhead

Factory overhead encompasses all indirect costs associated with manufacturing, such as utilities, maintenance, and management salaries, not directly tied to the production of goods.

Machine Hours

A measure of the total time that a machine or set of machines has been operating, often used to allocate factory overhead costs.