The quantity theory of money addresses the
A) long-run effect the quantity of money has on the price level.
B) determinants of potential GDP.
C) determinants of the equilibrium unemployment rate.
D) short-run effect the quantity of money has on the price level.

Question

Quizplus · Accepted Answer

The quantity theory of money primarily focuses on the long-run relationship between the quantity of money in an economy and the level of prices. It posits that an increase in money supply leads to a proportional increase in the price level, holding other factors constant.

The Quantity Theory of Money Addresses the