Assume that velocity and aggregate output are constant. if the money supply increases from $1.10 trillion to $1.14 trillion: a. aggregate output will increase by 2.73%. b. the price level will increase by 3.64%. c. the price level will increase by 2.73%. d. aggregate output will increase by 3.64%.

Option (B) is correct.

Explanation:

Money supply changes from $1.10 trillion to $1.14 trillion

Percentage increase in money supply =

                                                                = 3.636%

                                                                = 3.64% (approx.)

According to the quantity theory of money,

Money supply × Velocity = Price × output

Velocity and aggregate output is constant and if there is an increase in the money supply by 3.64% then as a result price level also increases by 3.64%.

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whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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