Post Utme Achievers University 2021 Economics Question 7

Practice objective / multiple choice question 7 from the 2021 Post Utme Achievers University Economics examination.

Post Utme Achievers University 2021 Economics Objective / Multiple Choice

Question 7 POST_UTME_ACHIEVERS_UNIVERSITY • 2021 • ECONOMICS • objective

A central bank is considering a contractionary monetary policy to combat inflation. If the central bank reduces the money supply by 10% and the velocity of money is 2, what is the expected effect on the price level?

Answer Options

A. The price level will increase by 20%.

Correct Answer B. The price level will decrease by 20%.

C. The price level will remain unchanged.

D. The price level will increase by 10%.

Correct Answer

Correct Option:

The price level will decrease by 20%.

About This Question

This is Post Utme Achievers University 2021 Economics Question 7. It is one of the objective questions from the 2021 Post Utme Achievers University Economics examination.

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