Quantity theory of money states that money supply

Assignment Help Business Economics

Reference no: EM131112386

The quantity theory of money states that the money supply (M), velocity of money (V), price level (P), and real GDP (Y) are related by the equation . According to this equation, if velocity and real GDP are constant and the Federal Reserve decreases the money supply, then the price level _____.

A. decreases

B. increases

C. does not change

D. increases rapidly, then decreases slowly

Reference no: EM131112386

Questions Cloud

Compute the optimal replenishment policy : Consider a cruise liner provisioning a certain consumable item for her next trip. In the first stage, the cruise liner procures from the home port region right before the start of the trip. The unit cost for the item at home port is c_1. The trip dur..

Federal reserve has continued its bond-buying program : During the given months of 2014, the Federal Reserve has continued its bond-buying program, called "Quantitative Easing 3" (QE3). During April, the Fed purchased $40 billion worth of bonds. Because of QE3, which of the answer choices gives correct po..

The bank into compliance with the capital requirement : The regulators at the FDIC decide to change the captial requirement in order to help prevent another bank crisis. They increase their required capital-to-asset ratio. In the space below explain how a bank can accomplish this -- how they could bring t..

Loan principal and interest on the agreed upon date : On March 1, Emily loaned Billy $1,000. Emily charged a monthly interest rate of 0.10 percent on the loan. Billy repaid all of the loan principal and interest on the agreed upon date, March 31. If the price of the camcorder on March 1 was $1,000 and f..

Quantity theory of money states that money supply : The quantity theory of money states that the money supply (M), velocity of money (V), price level (P), and real GDP (Y) are related by the equation . According to this equation, if velocity and real GDP are constant and the Federal Reserve decreases ..

Desire to maximize profits can work against racial : The desire to maximize profits can work against racial and other types of discrimination. To see this, consider two equally productive accountants named Ted and Jared. Ted is black, and Jared is white. Both can complete 10 audits per month. If the fi..

In ability-gender and performance standards : In Ability, Gender, and Performance Standards: Evidence from Academic Probation, Jason M. Lindo, Nicholas J. Sanders, and Philip Oreopoulos find evidence using regression discontinuity methods that being placed on academic probation increases the pro..

Divided equally among the population : In 2012 Forbes magazine listed Bill Gates, the founder of Microsoft, as the richest person in the United States. His personal wealth was estimated to be $66 billion. If there were 303 million people living in the United States that year, how much cou..

Total value of all corn-production subsidies : In 2009, it was estimated that the total value of all corn-production subsidies in the United States totaled about $4 billion. The population of the United States was approximately 300 million people that year. a. On average, how much did corn subsid..

User Account

All Pages