The quantity theory implies that if output and velocity are constant, then a 50 percent increase in the money supply would lead to less than a 50 percent increase in the price level.

Question

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According to the quantity theory of money, if output (real GDP) and velocity of money are constant, then a 50 percent increase in the money supply would lead directly to a 50 percent increase in the price level.

The Quantity Theory Implies That If Output and Velocity Are