a b c d a decrease in the money supply an increase in the mo

a. b. c. d. a decrease in the money supply. an increase in the money supply. a decrease in the production of output. an increase in the production of output. 41. If an economy produces 1,000 units of output with a price level of S1 and the money supply (M) is S500 velocity is a. 2 b. 500 c. 50 d. 5 43. Menu costs refer to: the money, time, and opportunity used to change prices to keep pace with inflation. b. a. the time, money, and effort one has to spend managing cash in the face of inflation. c. being penalized via taxes for making more money in dollars, even though real purchasing power hasn\'t changed at all d. None of these statements is true. Unpredictable inflation can cause businesses a. to have a hard time planning future production b. to cease production until they know how to adjust for inflation c. to restrict output and stockpile inventory d. None of these statements is true 44.

Solution

39.According to QTM,there is a direct relationship between quantity of money and level of prices.Thus,if the price level falls,the quantity of money also falls.

Answer-A.

41.MV=PT

M=500

P=1

T=1000

V=1*1000/500=2

Answer-A

43.Answer-A

It is a cost resulting from changing prices.

44.Answer-A

The currency becomes less competitive due to high Inflation.Thus, planning of future production is difficult.