The quantity theory of money is the idea that in the long run
A) the quantity of money serves as a good indicator of how well money functions as a store of value.
B) an increase in the growth rate of the quantity of money leads to an equal increase in the inflation rate.
C) the quantity of money is determined by banks.
D) the quantity of money determines real GDP.

Question

Quizplus · Accepted Answer

The quantity theory of money states that, in the long run, an increase in the growth rate of the quantity of money leads to an equal increase in the inflation rate. This is because there is a direct relationship between the quantity of money in circulation and the price level of goods and services in the economy.

The Quantity Theory of Money Is the Idea That in the Long