If an Economy Produces 4,000 Units of Output with a Price

question 148

Multiple Choice

If an economy produces 4,000 units of output with a price level of $2 and with a velocity of money of 8, we know that the money supply must be:

• A) $1,000.
• B) $8,000.
• C) $2,000.
• D) $4,000.

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Definitions:

Standard Of Living

Represents the level of wealth, comfort, material goods, and necessities available to a person, community, or society.

Medium Of Exchange

A medium of exchange is an intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties.

Commodity Money

Money that has intrinsic value because it is made of materials that hold value, like gold or silver.

Fiat Money

Currency that a government has declared to be legal tender, despite it having no intrinsic value and not being backed by physical commodities.