During the Civil War, both the Union (the northern states) a…
During the Civil War, both the Union (the northern states) and the Confederacy (the southern states) financed their spending through printing money. The Confederacy increased the money supply (M) by 1,900% between 1861-1865. The price level (P) increased by 9,200% during the same period. The Real GDP (Y) stayed roughly the same. This means that velocity (V) increased sharply during this time. Which of the following statements best explains why there was such a sharp increase in velocity