During the sixteenth century, Spanish conquistadors like Hernan Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities and taking their gold and silver. The gold and silver was sent back to Spain, causing its money supply to increase tenfold. Assuming that the velocity of money (V) remained stable and real GDP (Q) increased slightly, what happened to prices in Spain during this period?

Question

Quizplus · Accepted Answer

The Answer of During the sixteenth century, Spanish conquistadors like Hernan Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities and taking their gold and silver. The gold and silver was sent back to Spain, causing its money supply to increase tenfold. Assuming that the velocity of money (V) remained stable and real GDP (Q) increased slightly, what happened to prices in Spain during this period?

During the Sixteenth Century, Spanish Conquistadors Like Hernan Cortes Overwhelmed