According to the quantity equation, if V and M are constant, and Y doubles, which of the following 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.

Question

Quizplus · Accepted Answer

According to the quantity equation (MV = PY), if V (velocity) and M (money supply) are constant and Y (output) doubles, then P (price level) must fall to half to maintain the equality.

According to the Quantity Equation, If V and M Are