§ Mr. Gouldasked the Chancellor of the Exchequer what increase in the money supply would be required to reduce the velocity of circulation at present prices to the level in the 12 months ended June 1974.
§ Mr. MooreAssuming an unchanged level of money GNP in the fourth quarter of 1982, the level of £M3 consistent with the level of velocity in the 12 months ended June 1974 would have been £120£4 billion compared with the actual average level of £91£3 billion, an increase of nearly one-third. However, because £M3 growth and GNP are inter-related, it is unrealistic to assume (as the calculation implies) that £M3 growth could have changed substantially without having any effect on GNP.