If Nominal GDP Is $800 Billion And, on Average, Each

question 377

Multiple Choice

If nominal GDP is $800 billion and, on average, each dollar is spent four times in the economy over a year, then the quantity of money demanded for transactions purposes will be

• A) $200 billion.
• B) $400 billion.
• C) $800 billion.
• D) $3,200 billion.

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Definitions:

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.