According to the crude quantity theory of money,if M rises by 8%,Q will

Question

Quizplus · Accepted Answer

According to the crude quantity theory of money, MV = Py, where M is the money supply, V is the velocity of money, P is the price level, and y is the level of output. Assuming that V and y remain constant in the short run, an increase in M (money supply) by 8% will lead to a proportionate increase in P (price level) of 8%. This means that the increase in M will be fully offset by the increase in P, leaving Q (level of output) unchanged. Therefore, the answer is C, Q will stay the same.

According to the Crude Quantity Theory of Money,if M Rises