The real quantity of money is
A) inversely related to GDP.
B) inversely related to the price level.
C) measured in current dollars.
D) measured in constant dollars.

Question

Quizplus · Accepted Answer

The real quantity of money is adjusted for changes in the price level, and therefore it is measured in constant dollars. Option A is incorrect because the real quantity of money is not necessarily inversely related to GDP. Option B is incorrect because the real quantity of money is not necessarily inversely related to the price level, as it depends on the circumstances. Option C is incorrect because the real quantity of money needs to be adjusted for changes in the price level, so it cannot be measured in current dollars.

The Real Quantity of Money Is