Consider the Equation $\Delta$ M $\Delta$ V $\approx$ $\Delta$ P $\Delta$

question 23

Multiple Choice

Consider the equation % $\Delta$ M +% $\Delta$ V $\approx$ % $\Delta$ P +% $\Delta$ Y.If there is no change in real GDP (% $\Delta$ Y = 0) and there is no change in the money supply (% $\Delta$ M= 0) ,what would have to happen for there to be inflation (% $\Delta$ P $\gt$ 0) ?

• A) Money would have to change hands less often,%\(\Delta\)V \(\lt\) 0.
• B) Money supply times money velocity would have to go down,%\(\Delta\)M + %\(\Delta\)V \(\lt\) 0.
• C) Nominal GPD would have to go down,%\(\Delta\)P + %\(\Delta\)Y \(\lt\) 0.
• D) Money would have to change hands more often,%\(\Delta\)V \(\gt\) 0.
• E) The money velocity would have to remain the same,%\(\Delta\)V = 0.

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity supplied by producers.

Tax Burden

The total amount of taxes paid by individuals or businesses, relative to their income or profit.

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Dwelling units leased or rented to tenants under a contract or agreement, providing a place to live in exchange for payment.

Price Ceiling

A legal maximum price at which a good can be sold, often set by government to control prices.