According to the quantity theory of money, any change in the money supply:
A) must lead to an inverse change in the price level.
B) must lead to an exponential change in the price level.
C) does not lead to any change in the price level.
D) must lead to a proportional change in the price level.

Question

Quizplus · Accepted Answer

According to the quantity theory of money, any change in the money supply must lead to a proportional change in the price level. This means that if the money supply increases by a certain percentage, the price level will also increase by the same percentage. Similarly, if the money supply decreases by a certain percentage, the price level will also decrease by the same percentage. Therefore, the correct answer is D - must lead to a proportional change in the price level.

According to the Quantity Theory of Money, Any Change in the Money