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2.3 Economic performance

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Question 15

According to the Quantity Theory of Money, as illustrated by the Fisher equation of exchange MV=PQMV = PQMV=PQ, a contraction in the nation's money supply (MMM) will cause the greatest drop in the price level (PPP) under which of the following combinations of changes to the velocity of circulation (VVV) and the volume of real output (QQQ)?

A

Velocity of circulation (VVV) increases, Real output (QQQ) decreases

B

Velocity of circulation (VVV) decreases, Real output (QQQ) increases

C

Velocity of circulation (VVV) increases, Real output (QQQ) increases

D

Velocity of circulation (VVV) decreases, Real output (QQQ) decreases

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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