The equation of exchange states that the price level is equal to
A) the quantity of money.
B) velocity of circulation multiplied by the quantity of money divided by real GDP.
C) real GDP multiplied by the velocity of circulation divided by nominal GDP.
D) the velocity of circulation.
B
You might also like to view...
Along a segment of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
a. decreases quantity demanded. b. will increase total revenue. c. will decrease total revenue. d. is impossible.
Competition among decentralized governmental units will
What will be an ideal response?
Which of the following is an accurate comparison between long-run elasticities of demand and short-run elasticities of demand?
a. Long-run price elasticities of demand are greater than short-run price elasticities of demand mainly for luxury items. b. Long-run price elasticities of demand are equal to short-run price elasticities of demand EXCEPT for expensive items. c. Long-run price elasticities of demand are greater than short-run price elasticities of demand for most products. d. Long-run price elasticities of demand are less than short-run price elasticities of demand for inexpensive items.
Next the main employer in the town outsources a significant part of the business overseas. What will happen to Matt’s demand curve, his equilibrium price and the quantity of computers he sells? Assume that the last customer in town will now go without a computer if the price reaches $1,900 but that the customers still decline at the rate of one per $1 price increase.