According to the quantity theory of money, increasing the money supply:
A) leads to inflation.
B) increases production.
C) leads to decreased spending.
D) decreases the velocity of money.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, increasing the money supply will lead to an increase in the overall price level, causing inflation. This is due to the increased supply of money leading to a decrease in its value, and therefore a rise in the prices of goods and services.

According to the Quantity Theory of Money, Increasing the Money