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:

Discount

A reduction applied to the regular price of goods or services, often to encourage sales.

Par Value

A nominal value or face value assigned to a share of stock by the corporation at the time of issue.

Articles Of Incorporation

These are legal documents filed with a governmental body to legally document the creation of a corporation.

Liquidated

Refers to the process of converting assets into cash or completing a transaction, such as settling debts.