Economics 9708 · AS & A Level · Balance of payments

Balance of payments — practice question

Under the quantity theory of money, which combination would lead to the general level of prices staying unchanged?

  • Avelocity of circulation rises by 3%; total number of transactions remains unchanged; money supply remains unchanged
  • Bvelocity of circulation rises by 3%; total number of transactions remains unchanged; money supply rises by 3%
  • Cvelocity of circulation remains unchanged; total number of transactions rises by 3%; money supply rises by 3%
  • Dvelocity of circulation rises by 3%; total number of transactions rises by 3%; money supply rises by 3%

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