Asked by Adison Evans on May 19, 2024
Verified
According to the sophisticated,or modern quantity theory of money,if there is a depression and M rises,
A) P will rise.
B) P will fall.
C) Q will rise.
D) Q will fall.
Depression
A deep and prolonged business downturn; the last one occurred in the 1930s.
- Differentiate the fundamental and complex quantity theories of money.
- Apprehend the repercussions of alterations in the money supply on price levels and real output as interpreted by different economic models.
Verified Answer
KF
Karl Felicidario TabiosMay 25, 2024
Final Answer :
C
Explanation :
According to the sophisticated or modern quantity theory of money, if there is a depression and the money supply (M) increases, the output (Q) will rise. This is because, during a depression, the economy is likely operating below its potential output, and an increase in the money supply can stimulate economic activity and increase production.
Learning Objectives
- Differentiate the fundamental and complex quantity theories of money.
- Apprehend the repercussions of alterations in the money supply on price levels and real output as interpreted by different economic models.