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2.4 Financial markets and monetary policy (A-level only)

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Question 52

In an economy, the central bank implements an expansionary monetary policy. Consequently, an index representing the money supply multiplied by its velocity of circulation ( $M V$ ) increases from 100 to 136.5. Over the same period, supply-side factors cause the index of real national output ( $Y$ ) to increase from 100 to 105.

According to the Fisher equation of exchange ( $M V = P Y$ ), by what percentage will the price level ( $P$ ) change?

A

An increase of $30.0%30.0\%$

B

An increase of $31.5%31.5\%$

C

An increase of $43.3%43.3\%$

D

A decrease of $23.1%23.1\%$

Markscheme

2.4 Financial markets and monetary policy (A-level only) Questions

A Level
Economics
2.4 Financial markets and monetary policy (A-level only)

176 exam-style questions on AQA A Level Economics 2.4 Financial markets and monetary policy (A-level only), covering 2.4.1 The structure of financial markets and financial assets, 2.4.2 Commercial banks and investment banks, 2.4.3 Central banks and monetary policy, and 2.4.4 The regulation of the financial system. Each one has a worked solution and a mark scheme showing where the marks go.

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