The price level would change less than proportionately with a rise in the money supply if there were also a rise in output or a fall in velocity.
According to the quantity equation, the price level would change less than proportionately with a rise in the money supply
If there were also either a rise in output or a fall in velocity.
In the context of the quantity equation, if the velocity of money is constant, an increase in the money supply leads directly to a proportional increase in nominal GDP.
This could result in higher prices (inflation) or higher output (real GDP growth), or a combination of both.
However, if either the output increases or the velocity of money falls,
The rise in the price level would be tempered as the increased money supply would be offset by these other factors, leading to a less-than-proportional change in the price level.
The above question is incomplete, the complete question is:
According to the quantity equation, the price level would changeless than proportionately with a rise in the money supply if there were also:
A. either a fall in output or a rise in velocity.
B. either a fall in output or a fall in velocity.
C. either a rise in output or a rise in velocity.
D. either a rise in output or a fall in velocity.