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Inflation - Quantity theory of money Flashcards | StudBud
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Inflation - Quantity theory of money
Inflation - Quantity theory of money
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Answers
1
When the money supply increases, the price level increases (This is inflation)
False
True
2
What does the 'M' stand for in the equation?
Money supply
Marshmellows
Members
Monetary
3
What does the 'P' stand for in the equation?
Puppies
Price level
Products in the market
Producers in the market
4
What does the term 'Money Supply' mean - the M of the equation
Total value of money in World
Total value of money in economy
My own personal wealth
5
Definition: Equation showing relationship between M, V, P and Q
Velocity of circulation
Quantity of goods & services
Quantity theory of money
6
Which part of the equation covers the 'Quantity of GDP total production'?
Q
P
V
M
7
Which component in the crude theory measures inflation?
M - Money supply
P - Price level
VOC - Velocity of comsumption
Q - Quantity of GDP total production
8
Definition: Number of times money changes hands
Amount of cash in circulation
Deflation
Inflation
Velocity of circulation
9
In the crude theory, which two components are assumed to be constant?
P & M
Q & P
V & Q
M & V
10
Which components of QTOM are not constant according to the sophisticated model?
MVPQ
V & Q
V & Q & M
P & M
11
What does the QTOM will happen to the price level if the money supply doubles?
We will all be richer
Inflation - (P) will decrease
Inflation (P) will double
