Asked by Hadeel Damra on May 06, 2024
Verified
Given: M = 500,V = 9,P = 10,Q = 450.According to the crude quantity theory of money,if M rises to 700,how much would V,P,and Q be?
Quantity Theory
The theory in economics that the quantity of money available in an economy is the major determinant of the economic activity level, prices, and inflation.
Crude Quantity
An initial, unrefined estimate of the amount or volume of a substance or material.
- Utilize the Quantity Theory of Money to forecast alterations in the money supply, money velocity, price level, and economic output.
- Determine the effect of adjustments in the money supply on economic indicators through elementary algebra.
Verified Answer
DM
DENNIS MATHEKAMay 11, 2024
Final Answer :
P would rise (by 40 percent)to 14;V would remain at 9;Q would remain at 450.
Learning Objectives
- Utilize the Quantity Theory of Money to forecast alterations in the money supply, money velocity, price level, and economic output.
- Determine the effect of adjustments in the money supply on economic indicators through elementary algebra.