00:01
The quantity equation mv equals p y relates to, or relates the money supply, the velocity of money, the price level, and the output.
00:16
Supplies m, velocity v, price, p, output y.
00:20
If the money supply increases in the velocity v and output y are constant, then the price level will rise.
00:32
Again, if the money supply increases and the velocity and the output are unchanged, the only way the equation would balance would be for the price level to rise.
00:50
So this matches option c.
00:54
The velocity is constant.
00:57
Price is rise.
01:00
Total output is constant.
01:12
The fisher effect describes a relationship between nominal interest rates, really.
01:17
Interest rates and inflation.
01:19
And according to the fisher equation, the nominal interest rate is equal to the real interest rate plus the expected inflation...