According to the quantity theory of money:
A) there is a direct relationship between money supply and the price level.
B) money supply is negatively related to output.
C) the velocity of circulation of money in an economy is not stable.
D) the long-run aggregate supply schedule is positively sloped.

Question

Quizplus · Accepted Answer

The quantity theory of money posits a direct relationship between the money supply in an economy and the level of prices of goods and services. According to this theory, if the amount of money in an economy doubles, the price level also doubles, assuming velocity of money and the quantity of goods and services in the economy are constant.

According to the Quantity Theory of Money