According to the assumptions of the quantity theory of money,if the money supply increases 5 percent,then
A)both the price level and nominal GDP would rise by 5 percent.
B)the price level would rise by 5 percent and nominal GDP would be unchanged.
C)the price level would be unchanged and nominal GDP would rise by 5 percent.
D)both the price level and nominal GDP would be unchanged.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, if the money supply increases by 5 percent, both the price level and nominal GDP would rise by 5 percent, assuming velocity and real output are constant.

According to the Assumptions of the Quantity Theory of Money,if