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2.3 Economic performance

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Question 119

The monetarist view of inflation is based on the Fisher equation of exchange:

MV=PY MV = PY MV=PY

According to monetarist economists, an increase in the money supply (MMM) will cause a proportionate increase in the price level (PPP) in the long run because certain variables in this identity are assumed to be stable or determined independently.

Which pair of variables do monetarists assume to be stable in the long run?

A

MMM and VVV

B

MMM and PPP

C

VVV and YYY

D

PPP and YYY

Markscheme

2.3 Economic performance Questions

  1. A Level
  2. /Economics
  3. /2.3 Economic performance

327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.

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