If the Demand for Real Money Balances Is Proportional to Real

question 21

Multiple Choice

If the demand for real money balances is proportional to real income, velocity will:

• A) increase as income increases.
• B) increase as income decreases.
• C) vary directly with the interest rate.
• D) remain constant.

---

Definitions:

Finished Goods

Items are completed and ready for sale following a production process.

Cost Of Goods Manufactured

Represents the total cost incurred to produce products and get them ready for sale, including materials, labor, and overhead costs incurred in the manufacturing process.

Product Costs

The costs directly associated with the production of goods, including raw materials, labor, and manufacturing overhead.

Outdoor Furniture

Items designed for use outside the home, such as in gardens, patios, or by pool sides, typically made from weather-resistant materials.