According to the Quantity Equation, If V and M Are

question 78

Multiple Choice

According to the quantity equation, if V and M are constant and Y doubles, what will happen to the price level?

• A) It will fall to half its original level.
• B) It will not change.
• C) It will double.
• D) It will more than double.

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Definitions:

Market Price

The current price at which a good or service can be bought or sold, determined by the balance of supply and demand in the market.

Consumer Surplus

The differential in the total price consumers are interested and capable of paying for a product or service and the actual price paid.

Producer Surplus

The gap between the price sellers are ready to accept for a good and the actual price obtained.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved, leading to an underproduction or overproduction of that good or service.