According to the quantity theory of money, which of the following is likely to be an effect of an increase in the size of the money supply, assuming stable prices? a. In the short run, the velocity of money will decrease. b. In the long run, worker productivity will increase. c. In the short run, nominal GDP will decline. d. In the long run, the price level will decline. 8 mins.
A or C
A or D. I say D.
according to: Mv=PY if : M= constant P= increase v should decrease. Answer is A
i would say C
A, I think quant theory about money is all about velocity.
I feel good that strange and map are picking those choices that I have picked. gives me more confidence in my eliminating answer choices abilities.
I would like to start a survey: Who of those who posted an answer do know the important equation Mv=PY? Strangedays scores!
A.
I am 0 in economics. I was told economics is common sense. So I don’t know any formula or equation from economics.
Strangedays , > P= increase but the question says prices are stable. Are you going to change your answer?
it’s a typo dreary
i do, but i thought that the immediate reaction would be a decrease in GDP as result of inflation brought by increased money supply. I guess is not that immediate…
if m goes up and p is const then: v goes down or Y goes up
map1, > i thought that the immediate reaction would be a decrease in GDP as result of inflation but the immediate reaction is an increase in GDP if money supply goes up, always.
Dreary Wrote: ------------------------------------------------------- > map1, > > i thought that the immediate reaction would be a > decrease in GDP as result of inflation > > but the immediate reaction is an increase in GDP > if money supply goes up, always. So…the result is?
Like we said A.
never seen a more anxious crowd! Good thinking strangedays! Yes it is A. pepp, excellent common sense. Just add to it a little knowledge of graphs and some equations and you’ll do well in econ. right cfaisok…always go for the easy way out.
I said C. Dreary Wrote: ------------------------------------------------------- > map1, > > i thought that the immediate reaction would be a > decrease in GDP as result of inflation > > but the immediate reaction is an increase in GDP > if money supply goes up, always.
