Economics 9708 · AS & A Level · Oligopoly
Explain the link between the quantity of money in an economy and the value of money in that economy.
Explain the effects of a substantial rise in the general price level on the functions of money and discuss which you think is most damaging for a modern economy.
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “For knowledge and understanding of the ‘quantity of money’ as liquidity within an economy and the ‘value of money.’ Note: the quantity theory of money implies that an increase in the quantity of money in an economy will make the general price level rise and the value of money fall. Allow full marks for responses that question the link, provided the theory is applied accurately.” …