Suppose that velocity rises while the money supply stays the same. It follows that

a. P x Y must rise.

b. P x Y must fall.

c. P x Y must be unchanged.

d. the effects on P x Y are uncertain.

Question

Business

Jazlyn Snow

22 December, 04:14

Suppose that velocity rises while the money supply stays the same. It follows that

a. P x Y must rise.

b. P x Y must fall.

c. P x Y must be unchanged.

d. the effects on P x Y are uncertain.

+3

Answers (1)

Know the Answer?

Zaid Welch · Answer 1

The correct answer is A

Explanation:

Velocity is the rate at which the people or individual spend money or cash. The velocity is the yield in the money supply. And when the velocity rises, means that the spending is increasing, keeping the money supply same, it states or follows that the:

P * Y must increase or rise

where

P is Price

Y is Quantity

Suppose that velocity rises while the money supply stays the same. It follows thata. P x Y must rise.b. P x Y must fall.c. P x Y must be unchanged.d. the effects on P x Y are uncertain.

Suppose that velocity rises while the money supply stays the same. It follows that

a. P x Y must rise.

b. P x Y must fall.

c. P x Y must be unchanged.

d. the effects on P x Y are uncertain.