During the sixteenth century, Spanish conquistadors like Hernando Cortes overwhelmed the Aztecs and other indigenous peoples in America by pillaging their cities, and taking their gold and silver. The gold and silver was sent back to Spain, causing its
money supply to increase tenfold. Assuming V remained stable and Q increased slightly, what do you think happened to prices in Spain during this period?
According to the equation of exchange, if M greatly increases while V and Q don't change very much, the price level (P) will rise. That's what happened. Spain experienced rapid inflation. In fact, prices rose all over Europe, especially near trading centers, as the new money was sent.
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________ in the money supply creates excess ________ money, causing interest rates to ________, everything else held constant
A) A decrease; demand for; rise B) An increase; demand for; fall C) An increase; supply of; rise D) A decrease; supply of; fall
It is possible that a firm in a perfectly competitive market earns a negative profit in the long run.
Answer the following statement true (T) or false (F)