If the Aggregate Price Level Doubles

question 265

Multiple Choice

If the aggregate price level doubles:

• A) the money supply will also double.
• B) neither money demand nor the money supply will rise.
• C) both money demand and the money supply will rise proportionally.
• D) money demand at any given interest rate will also double.

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Definitions:

Debt-paying Ability

A measure of a company's financial strength, indicating its capability to meet both short-term and long-term liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and health of the company.

Current Ratio

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets, indicating its financial health.