If velocity and the money supply are __________________,then when one component of spending rises another component of spending ________________.
A) constant; must fall
B) constant; must rise
C) rising; may not necessarily fall
D) rising; must rise

Question

Quizplus · Accepted Answer

When velocity and the money supply are rising, it does not necessarily mean that one component of spending must fall in order to accommodate for the increase in the other component. This is because there are multiple factors that influence spending, such as consumer confidence, interest rates, and government policies. Therefore, it is possible for all components of spending to rise simultaneously.

If Velocity and the Money Supply Are __________________,Then When One