If the Economy's Real GDP Is Growing at 3 Percent

question 18

Multiple Choice

If the economy's real GDP is growing at 3 percent each year and velocity is constant, for the price level to increase:

• A)​the money supply would have to grow at more than 3 percent per year.
• B)​the money supply would have to grow at exactly 3 percent per year.
• C)​the money supply would have to grow at less than 3 percent per year.
• D)​the money supply would have to remain stable.

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Definitions:

Capitalists

Individuals or entities that own capital, invest in businesses, and seek to generate profit from their investments.

Profits

The financial gains obtained when the revenues generated from a business activity exceed the expenses, costs, and taxes involved in sustaining the activity.

Control

The power to influence or direct people's behavior or the course of events.

Part-Time Workers

Employees who work fewer hours than a full-time schedule, typically by choice or due to the nature of the job, often resulting in reduced benefits and pay.