According to the Quantity Theory of Money, Increases in the Money

question 43

Multiple Choice

According to the quantity theory of money, increases in the money supply lead to

• A) decreases in nominal Gross Domestic Product (GDP).
• B) increases in the price level.
• C) decreases in the price level.
• D) increases in taxes.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Unrelated Year-end Adjustments

Adjustments made to the financial statements at year-end that do not pertain to the normal operations of the business.

Prepaid Insurance

An asset account representing payments made for insurance coverage before the coverage period.

Accrued Salaries

Salaries that have been incurred but not yet paid; an expense that represents the amount of salary earned by employees but not disbursed by the end of the accounting period.