Question

Suppose that velocity rises while the money supply stays the same. It follows that

a. P x Y must rise.
b. P x Y must fall.
c. P x Y must be unchanged.
d. the effects on P x Y are uncertain.

Answer 1

The correct answer is A

Step-by-step explanation:

Velocity is the rate at which the people or individual spend money or cash. The velocity is the yield in the money supply. And when the velocity rises , means that the spending is increasing, keeping the money supply same, it states or follows that the:

P × Y must increase or rise

where

P is Price

Y is Quantity