CAIE A-Level Economics 9.4.3 Quantity theory of money
Practise applying MV=PT to price-level questions, velocity changes and monetarist arguments about inflation and money growth.
- Syllabus
- 2026–2028
- Course
- Economics 9708
- Level
- A2
Exam points
- use MV=PT tables to predict whether the general price level rises, falls or stays unchanged
- explain how changes in velocity or transactions offset money-supply growth
- link monetarist assumptions to inflation under full employment or stable velocity
9.4.3—Quantity theory of money question 1
[Maximum number: 1]
Which statement about the quantity theory of money is correct?
A
It suggests changes in liquidity preference lead to proportional changes in the price level.
B
It suggests changes in the money supply lead to proportional changes in the price level.
C
It suggests changes in the price level lead to proportional changes in liquidity preference.
D
It suggests changes in the price level lead to proportional changes in the money supply.
B
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