According to the quantity theory of money, if M's growth is lower than Q's, then:
A) V falls.
B) V rises.
C) P rises.
D) P falls.

Name: According to the quantity theory of money, if M's growth is lower than Q's, then: A) V falls. B) V rises. C) P rises. D) P falls.
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Question

Quizplus · Accepted Answer

According to the quantity theory of money, P = M × V / Q. If M's growth is lower than Q's, then the value of V falls, as M × V must equal Q × P. With a decrease in V, the value of P must fall accordingly.

According to the Quantity Theory of Money, If M's Growth