객관식
According to the Quantity Theory of Money, if real output (y) and velocity (v) are constant and the money supply (m) doubles, what happens to the price level (P)?
112
views
18. Monetary Policy
Quantity Theory of Money
객관식
What is the quantity theory of money?
A
A theory that inflation is driven mainly by government budget deficits and fiscal policy rather than changes in the money supply.
B
A theory that changes in the money supply are the primary determinant of the price level and nominal GDP, summarized by MV = PY with roughly constant velocity.
C
A theory that increases in the money supply always cause lower interest rates in the long run.
D
A theory that the price level is determined solely by production costs and supply-side factors, independent of the money supply.
검증된 단계별 안내1
Step 1: Understand the core idea of the Quantity Theory of Money, which links the money supply to the overall price level and nominal GDP in an economy.
Step 2: Recognize the key equation that summarizes this theory: \(\text{MV} = \text{PY}\), where \(M\) is the money supply, \(V\) is the velocity of money (the rate at which money circulates), \(P\) is the price level, and \(Y\) is the real output or real GDP.
Step 3: Note that the velocity of money (\(V\)) is assumed to be roughly constant in the short run, which means changes in the money supply (\(M\)) directly affect the nominal GDP (\(PY\)).
Step 4: Understand that according to this theory, if the money supply increases faster than real output (\(Y\)), the price level (\(P\)) will rise, leading to inflation.
Step 5: Conclude that the Quantity Theory of Money emphasizes that changes in the money supply are the primary driver of changes in the price level and nominal GDP, rather than fiscal policy or supply-side factors.
관련 영상
관련 실천
