Asked by Ashlyn Albert on May 14, 2024
Verified
If MV rises from 180 to 270,
A) PQ will fall by 50%.
B) PQ will stay the same.
C) PQ will rise by 50%.
D) PQ will rise by 100%.
MV
MV, short for "Mean Value," is a measure used in statistics and mathematics to denote the average or central value of a set of numbers.
PQ
PQ, in the context of mathematics, often stands for a specific pair of points or variables in an equation or algorithm, representing a particular problem or query to be solved.
- Understand the impact of changes in money supply on price levels and real output according to different economic theories.
Verified Answer
RL
Ricardo LadróndeGuevaraMay 17, 2024
Final Answer :
C
Explanation :
MV stands for “money velocity”, which is the frequency at which money is exchanged in the economy. The equation MV = PQ tells us that the total amount of money spent on goods and services (PQ) is equal to the money supply (M) multiplied by the money velocity (V).
When MV rises from 180 to 270, it means that money is changing hands more frequently, which should lead to an increase in the total amount of money spent on goods and services (PQ). Since the equation MV = PQ holds true, an increase in MV must result in an increase in PQ, and a decrease in MV would result in a decrease in PQ.
Therefore, the correct answer is C) PQ will rise by 50%. An increase in MV by 50% will lead to a 50% increase in PQ, assuming that M remains constant.
When MV rises from 180 to 270, it means that money is changing hands more frequently, which should lead to an increase in the total amount of money spent on goods and services (PQ). Since the equation MV = PQ holds true, an increase in MV must result in an increase in PQ, and a decrease in MV would result in a decrease in PQ.
Therefore, the correct answer is C) PQ will rise by 50%. An increase in MV by 50% will lead to a 50% increase in PQ, assuming that M remains constant.
Learning Objectives
- Understand the impact of changes in money supply on price levels and real output according to different economic theories.
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