According to Monetarists,how Does a Change in the Money Supply

question 138

Multiple Choice

According to monetarists,how does a change in the money supply affect the economy?

• A)By changing the velocity of the money which in turn changes the nominal GDP.
• B)By changing the rate of interest which in turn changes nominal GDP.
• C)By changing investment which in turn changes nominal GDP.
• D)By changing aggregate expenditures which in turn changes nominal GDP.

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Definitions:

Perfectly Competitive

A market structure where many firms sell identical products, entry and exit are easy, and no single seller can influence the market price.

Market Price

The present cost for purchasing or selling an asset or service within a specific market.

Minimum-Cost Output

The level of production at which a firm can produce goods at the lowest possible average total cost.

Profit-Maximizing Quantity

The quantity of output at which a firm's profit is at its maximum, where marginal cost equals marginal revenue.