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.

Question

Quizplus · Accepted Answer

The quantity equation is MV = PY, where M is the money supply, V is the velocity of money, P is the price level, and Y is the real output. If V and M are constant and Y doubles, to maintain the equality, P must fall to half its original level.

According to the Quantity Equation, If V and M Are