Holding All Else Constant,in the Short Run,an Increase in the Money

question 93

Multiple Choice

Holding all else constant,in the short run,an increase in the money supply can cause:

• A) an increase in unemployment.
• B) a lower rate of inflation.
• C) a decrease in the price level.
• D) a decrease in real gross domestic product (GDP).
• E) an increase in real GDP.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point. It indicates the amount of sales decline a business can endure before it starts incurring losses.

Variable Costs

Costs that change in proportion to the level of activity or production volume.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Operating Income

A measure of a company's profit generated from its core business operations, excluding deductions of interest and tax.