Asked by
rajesh reddy
on Oct 12, 2024
Verified
According to the crude quantity theory of money,if M rises by 8%,Q will
A) fall by 8%.
B) fall by less than 8%.
C) stay the same.
D) Rise by less than 4%.
E) rise by 8%.
Crude Quantity Theory
A basic concept in economics that suggests the amount of money in circulation determines the level of economic activity, affecting prices and inflation.
M Rises
An increase in the money supply in an economy, which can affect inflation and interest rates.
Q Falls
Indicates a decrease in the quantity demanded or supplied of a good or service, often in response to changes in price, income, or other factors.
- Gain an understanding of the equation of exchange and its constituent parts (MV=PQ).
- Examine the correlation between the supply of money, inflation rates, and the stability of the economy.
Verified Answer
HB
Learning Objectives
- Gain an understanding of the equation of exchange and its constituent parts (MV=PQ).
- Examine the correlation between the supply of money, inflation rates, and the stability of the economy.