An increase in the quantity of money leads to a proportional increase in the price level according to the
A) short- run velocity model.
B) equation of exchange.
C) quantity theory of money.
D) short- run theory of inflation.

Question

Quizplus · Accepted Answer

The quantity theory of money states that an increase in the money supply leads to a proportional increase in the price level, assuming velocity and output are constant.

An Increase in the Quantity of Money Leads to a Proportional