Answer:
If the money supply is MS2 and the value of money is 5, then the quantity of money
a. demanded is greater than the quantity supplied; the price level will rise.
Explanation:
If the money supplied is greater than the quantity demanded; the price level will fall. The quantity theory of money, popularized by Irving Fisher but developed by John Maynard Keynes, states that the value of money is influenced by the forces of demand and supply. This theory implies that money supply and price level proportionally influence each other.
The discipline of economics known as monetary economics analyses various theories of money. The quantity theory of money is one of the key research areas for this field of economics.
Correct option is A.
If the amount of money supplied exceeds the amount sought, the price level will fall. The quantity theory of money, popularized by laving Fisher but pioneered by John Maynard Keynes, asserts that demand and supply affect the value of money.
According to this idea, the money supply and price level have a proportional influence on each other.
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